themselves but self-evidently to my mind, plausibly, if somebody gave them the ingredient it would take them far less that is basically the sort of position that they're taking. you have now got a particular problem with that. which was retaining some sort of consistency with the americans. president bush in his speech to the u.n. general semion the 12th of september, said, should iraq acquire fissile materiel, basically point of something giving you ingredients, it would be able to build a nuclear weapon within a year. >> yeah. . . so did you see that as a problem of reconciliation between a rather relaxed timetable suggested by the jic and it's

incredibly urgent timetable to be mentioned by the president. >> when i saw the -- the latest guardian conspiracy theory yesterday about the issue. and i had knowledge of any discussion about britain and america. as far as what i recall, the dossier and timelines was because one of the drafts i in one of the drafts i genuinely did not understand that saddam hussein could get a nuclear weapon in place than was essentially was removed. mr. dingellman, the council's

q.c. took me through the issue in some detail and pointed out the institute of studies said you could get a weapon in nine months. if we were in the business i think we would have been pressing for that. so i'm afraid on this whole business of us trying to align with the americans -- if that was going on in the intelligence level i have no idea. but in terms of my role in relation to the dossier, i have nothing to do with it. >> the prime minister shares your worries about -- the this paragraph that was in the september of 16th draft and you would like a timeline as, quote, radiological device, nuclear bomb in one to two years which is different than what was in the 16th and that does start on align with the americans. but it makes it much more specific. >> well, maybe it does. the point that i've been making in relation to the nuclear timelines in the dossier was not

what they were saying be the jrc or the americans or the institute of institute of studies i could not understand in one of the drafts it appeared to suggest that he could do it more quickly than without sanctions than with sanctions. >> that was not the only email that you sent. there was one on the 18th of september. you reported the comments of someone in your office who found the nuclear section confusing and left me not something to worry about. i worry the nuclear section will become the main focus and as currently drafted is for the in good shape. >> it was not clear, that's the point i was not making. >> in response john scott explained they had no intelligence on an improvised nuclear device but he had amended the sections to make it clearer. on the section in the 19th of september draft it does change. and it now includes this one to

two-year timeline. so something had changed. so for some reason this had not been in the initial draft but now it's saying we, therefore, if iraq gets this fissile material and components from other sources the timeline of a nuclear weapon could be shortened and iraq could produce nuclear weapon in between one and two years. that's quite a significant change. because the evidence we had the focus was on five years after the lifting of sanctions. now, we're taking a very particular scenario which somebody is giving iraq an awful lot of hell -- >> right. i can only talk to you about what i know and from what i do and what i did. in writing anything that flowed from any intelligence assessment, then that was not my role. that was not my position. so if it did change from draft to draft, then that is because

john scarlet and his team have chosen based upon the intelligence assessments to write it in a different way. i pointed out, i think, perfectly legitimate point which is that i did not understand it. if you like a layman's point. i did not understand what they were saying. and as a result of that -- >> this was not the only email -- i know the email -- >> it may not have been the only email. and the fact that there's somebody else, that email that you read to me written by somebody else seems to -- >> no. >> it's impossible to get a transcription with cross-conversation. >> i'm sorry. the email that i was just quoting was you reporting somebody else's comments to you. >> yes. >> so you thought that was important -- >> if the email is what i think it is -- >> it was somebody in your office. >> right. and what i did is i took -- look, quite a few people in the office have seen this at every stage, every draft. i took it to somebody who had

not been involved in the process at all. and said i would like you to read this. and they are making the exactly same point i made. she couldn't quite understand that point. >> in your published diary from 19th of september, you said that nuclear timelines just about sorted. what did you mean about that? >> what i meant by that is that finally after a bit of discussion about it, judy miller and john scarlett had written it in a way i understood and everybody else understood. i cannot stress strongly enough in relation to anything that flows from an intelligence assessment -- and i think this is very, very clear from the memos that you referred to, both my memos to john scarlett and his responses that not a single one of them at any time sought to question, override, rewrite, let alone the ghastly sex-up

phrase, the intelligence assessments in any way at any time on any level. >> but what we're looking at is a process where the overall impression you get from the intelligence shifts -- and we start off with a situation which we've had confirmed to us was the -- >> you should ask john scarlett about that. >> i'm not just talking about john scarlett. the situation in which the overall view after the sanctions could produce a nuclear weapons and it says that there will be others who say present going it could be several years before he acquires a useable nuclear weapon though if he were able to produce fisill material legally it would only be a year or so. this is highlighted -- >> and also you could have added although the institute of strategic studies is a hugely

enormous body. i think we are in part having this discussion. i completely accept that there's an argument to be had about whether intelligence material should be used by an elected prime minister and explains to the public the decision-making process. i think it's a good thing. i think it showed much greater openness in government. i think it was a genuine attempt to take the public into his confidence about why he was as concerned as he was. i really do believe that it's only because of the subsequent privacy we're talking about this line and that paragraph and some of the changes that took place in the drafting process. and all i can say -- i'm sorry. i'll just repeat myself because when it came to it, i was not being accused of sort of, you know, moving this line and moving that line and shifting this paragraph and shifting that paragraph. i was being accused of distorting intelligence, of forcing intelligence officials

to do things that they didn't want to do. and it was simply untrue. now -- >> on this basis you should be delighted i'm not going to turn to the 45 minutes claimed. now, there has been a number of inquiries, it's been established that you didn't make up the claim. and that you didn't insert it in the dossier. >> that's been established, yeah. >> that's fine. but important issues have been raised about the way the claim was expressed and used. now, one view is that there was nothing particularly exceptional or surprising about this information. we have this from tim douse in his evidence.g3 you'll recall that it was, quote, referring to something like multibarreled rocket launchers, the sort of weapon or delivery system that could be kept ready for rapid deployment in the event of a conflict. so the key thing is that this refers to battlefield systems. >> uh-huh.

>> the jic assessment of the new intelligence used after drafting discussions on the 9th of september states that, quote, iraq is probably dispersed its special weapons including its cbw weapons. intelligence also indicates that chemical and biological munitions could be with military units and ready for firing within 20 to 45 minutes. after the dissemination after the first draft of the dossier it was suggested that this new intelligence should go into the next draft. and that appears as the iraq military may be able to deploy chemical and biological weapons within 45 minutes of an order to do so. now, it's already noted and reporting ambiguity creeping in, this isn't just a question of distortion or misleading or anything like that. it's about the problem when

you're dealing with quite technical issues of creating an accurate sense of what's involved. because when you're using the word "munitions," that really conveys battlefield use. whereas weapons could be anything. it could be long-range weapons. i'm just wondering whether you or members of your team were involved in the discussion of how this 45 minutes was going to be introduced in the drafting. and whether this distinction was one that was understood by your team who mattered? >> well, again, i think one of your earlier witnesses talked about this iconic 45 minutes. and again, it certainly wasn't us who made it iconic. i noted in the butler reported -- i'd forgotten this but the butler committee orote to 60 editors and seniors, journalists to ask whether the government had been seeking to promote this 45 minutes as a

major part of the september dossier. and uniformly they said, no, we had not. it wasn't within the discussions -- to be frank, it wasn't that big of a deal. and you may say, well, it was mentioned here and the prime minister mentioned it. that's true. he mentioned lots and lots of different things. he mentioned lots of different arguments. he mentioned lots of different parts of the dossier. and i made two points on this. the original intelligence as you say says 20 to 45 minutes. if we'd been in the sexy-up game i think we would have said come on john, can't you do the 45 minutes. that discussion didn't take place. i don't think i was even aware of that until quite later on in that process. and likewise when the prime minister stood up in the house of commons -- i think in terms of the public, what they would see and to the dossier, i don't know how many people actually read it. but i don't know.

but more people would have seen the prime minister standing up in parliament. and when you refer to the 45 minutes, within the same sentence he talked about including against his own sheer population. so i don't think we were ever saying, look, saddam hussein has got these weapons and going off in cypress in 45 minutes and if one or two papers went down that line they weren't pushed there by us. >> i accept that. but if you're talking about the importance of bringing intelligence into the public domain, personally i'm well in favor of. >> could it have been clearer? obviously. you can go back with the benefit of hindsight and you can rewrite every single thing. but i'm simply saying to you that we -- that was not that big a point within the overall case that the prime minister was putting in at the time. >> can we just make a couple more points on this then. first, there's a purely presentational question which i don't want to spend a lot of time on. but the -- if you actually look

at the way that the 45 minutes claim is presented at the start of chapter three in the dossier, it appears some distance away from the point where chemical and biological weapons have been developed for artillery, bombs, sprays and so on, and then just after a piece on extended range versions of scud ballistic missiles capable of reaching tehran, eastern turkey and cyprus. was it longer range weapons than was the case? is -- who's responsibility it is. >> we're only looking at this in such microscopic detail in that way because it became -- >> but it was something -- >> nobody was really saying that at the time. >> well, they were in the sense

of how it was picked up by the press which i'll come to in a second. and then we have this question which again was -- the discrepancy between the draft text, which said the iraqi military may be able to deploy these weapons within 45 minutes of the decision to do so. but the executive summary says, has military plans for the use of chemical and biological weapons, some of which could be ready in 45 minutes of an order to use them. and by the next draft the text has come online with the executive summary. now you did make a suggestion. >> i pointed out the inconsistency which is exactly what i was there to do. you rightly say it was expressed differently in different places and i pointed that out. what i didn't say you should write it this way. >> would you have been surprised if it may have come into the executive summary?

>> it was entirely thin. one side in the memo that you referred to and i set out a series of observations -- it was thereafter entirely up to john scarlett to decide how he resolved that. on that one i simply pointed out -- i said, look, as mentioned here and it's expressed differently in this other part of the paper. as i understand it, again, this is from memory, i think julian miller had already spotted it anyway. >> would it had have been an inconsistency with the forward. his military planning allows for some of the wmd be allowed for -- >> he expressed it differently but it's not inconsistent. he expressed it differently again when he stood up in the house of commons. but, you know, we don't go all around saying the same thing in exactly the same way on every occasion.

i really don't think -- i think this is a point that is -- that has been gone over exhaustively, not because of any of the decision-making process at the time of the dossier but because of what followed after. >> i'll finish and i'll come to that. i want to check first, were you aware that there were a number of intelligence professionals, dr. brian jones from dis who was aware that this tightening up of language was creating a degree of certainty in the language that was not justified? he wasn't opposed in including the phrase but intelligence should suggest. >> i was aware, as i said earlier, of some reports in the press of some people within the agencies suggesting disquiet but john scarlett, and richard

dearlove did not reflect of their assessment of how most people in the agencies felt. >> you've mentioned already that this footnote in the report which comments of correspondence with editors of national regional newspapers. what it says there is a number suggested that the 45-minute story attracted attention because it was eye-catching in a document containing much and was technical in nature. it did attract a lot of attention. it didn't because of what happened with the today story. it taektd a lot of attention at the time. >> the main -- look, the big message and the big point that came out of the day's events as i recall, that tony blair, the prime minister was publishing an intelligence-based dossier that he explained why current was a

current and credible threat and lots and lots and lots of detail and virtually every single point within the dossier was getting some sort of attention, and some sort of coverage. we did not see it. and did not plan our communications around that particular point. >> i think jonathan powell will send you an email on the 9th of september. what will be the standard on the day of publication? what do we want it to be? >> what did i reply? >> i don't know. [laughter] >> what did you want it to be? >> look, by then you can -- i know that we have -- maybe i have a reputation of sort of worrying and obsessing about headlines. the truth is i don't and i never did for a very, very large period that i was in downey street because i reached the point of understanding -- this goes back to the point about what strategic communications is. it's not really about one headline. it's not about one bulletin.

it's really you're communicating over time your objectives clearly, your strategic thinking clearly and whether you are getting your message through to the public. so jonathan inquiring like that, fine, as to what i replied, i haven't got a clue similar >> whether you saw evening standard 45 minutes from attack iraqis could have bomb in a year. the sum brits 45 minutes from doom, a reference to cyprus, saddam can strike in 45 minutes, were you surprised by those headlines? >> i'm not surprised by anything. -- most of the british newspapers write on a daily basis. when we were preparing that -- and it is really why it's so unfortunate the debate developed as it did subsequently when the bbc broadcasted the broadcast that they did.

i think it was a very, very important development in communications. i think there's a real -- there's a risk arising out of this that a in the future is very difficult international crisis situations that develop. that because of the controversies that have subsequently flowed, the politicians and -- they don't take the decisions that maybe they should. i still -- i defend every single word of the dossier. i defend every single part of the process. and i think it was -- it was a genuine attempt by the prime minister and the government to engage the public properly in trying to -- in understanding why the prime minister was thinking -- was developing as it was. >> i'm sure this will want to come in, just a final point.

i think from one of the lessons -- we are about lessons. and the importance of this -- maybe we agree on your final observation in terms of the government may want to do this sort of thing in the past. that it is important, therefore, to understand why this particular product is now looked at so negatively. and perhaps there are lessons to be learned are about taking more care with -- >> i really would like to come back on that. i don't believe it was looked at negatively at the time. insofar as you say it was looked at negatively, it was looked at negatively by a media that just refuses to accept that when lord hutton investigated it and looked at it in the detail that he did, he came to the only conclusion that any analysis of the evidence could to.

since when they never tell anybody what the report concluded. they simply say that it was a whitewash and, oh -- >> but -- >> but that's the point. >> that's not the point that i'm concerned with. the reason why the dossier -- >> please don't cross-talk. >> i really think i should have the opportunity to respond to this because i think it goes to the heart of it. you say the dossier is regarded negatively. now, actually a lot of people do not regard it negatively because they understand that the basis of the case the prime minister made is contained within there about a genuinely perceived threat. if you have a media culture that decides that because a certain inquiry did not find as they kept telling their viewers and listeners and readers they were going to do on the points that you've just been raising and day after day after day they tell people -- actually, they didn't get to the truth.

only we can get to the truth, then no wonder people end up thinking what was that about? and then when they deliberately conflate with the paper that will no doubt we'll come on to in february, so they routinely say that the dossier we've been discussing was lifted off the internet, it's no wonder the public started to think what was that all about. >> well, the reason why the document became controversial and the issue arose in the end was because, unfortunately, a lot of the material that was contained within it when tested against what was actually in iraq after the invasion, it turned out not to be there. i mean, the big problem was the -- >> then you have a debate about the intelligence, that's what it was about. my point -- that point makes my point for me. lord hutton stated in terms even if the intelligence turns out to have been wrong, it did not

justify the reporting of the issue. and my point is it's the reporting of the issue and the controversy that caused and indeed that tragedy that caused, that is what makes it viewed by some in the way that you've described. and i'm sorry. that is my very strongly held opinion. i cannot see it any other way. >> well, i think we're coming from a different direction to that. but i'll pass on that. >> thank you. i'm going to declare a lunch break at this point. we've heard evidence so far on your rolls of communications and strategy, on some of the key meetings handled in that capacity and on the september, 2002, dossier. i think a one or two of my colleagues will have a couple of follow-up on that break and we would like to take further evidence on the february dossier, your understanding and involvement in the development of the british government policy in iraq after that and the

coordination of the government's wide campaign on it. so i suggest we break until 2:00 and come back then. now, could i just bring to the attention of those of you who have been attending throughout the morning, if you wish to attend again this afternoon, you will need to reregister. and the reception desk will open for that purpose at 1:15. that's downstairs. so with that, we'll come back at 2:00. welcome back, everyone. our witness. picking up from where we left off before the lunch break and two or three supplementaries on the september dossier, first off, i'm going to ask one or two points he wants to raise. >> when you were talking about the press conference at

sedgefield in early september of 2002, you said that this followed a period in which neocons in america had stood up on speculation about the possibility of reaction and the prime minister's purpose in that press conference had been to try to calm down the atmosphere. is that a fair reflection? >> yeah. not just at the press conference but in the -- in the days prior to that with mozambique and south africa. it's fair to say that our media traveling with us was pretty close to a state of frenzy of iraq in a sense that it was taken and only happen only in a matter of time and that kind of thing. so i think the tone of the sedgefield comments was to do two things, one, just to calm things instead of y'all getting ahead of yourselves and no decisions have been taken. there will be all sorts of questions that have to be answered. and he listed some of those

questions at the press conference. and then announced as part of this ongoing debate and deliberation we'd publish the dossier. >> as we heard this morning, the 45-minute claim in the dossier, he hit up a new frenzy. and very big headline stories. and as you said, on the butler committee established that this was not as a result of briefing by you but nevertheless a frenzy happened -- >> a frenzy then at the time of the publication. >> well, i think sir lawrence freedman talked about huge headlines right across the front page of the evening standard. >> headlines not a frenzy. >> let's not split hairs over this. a number of newspapers covered this in a very dramatic way. would that be a fair -- >> yeah. when i talk about a frenzy, i mean, when newspapers are all chasing the same story, the

television and the radio are talking about it 24/7. that's what a frenzy is. >> well, the 45-minute claim attracted some very big stories in a number of newspapers. i don't have to characterize that one way or another. did you take action then to dampen down that speculation? did you get on to those papers to correct the misrepresentation of the story? >> i didn't specifically but insofar as anybody else would have followed them up, it would have been made clear what that referred to. to be honest -- >> you weren't broactive, you and your office, are not proactive in pointing out to them that a claim that had preferred to munitions essentially battlefield weapons was being represented in a quite different and much more alarming way by some newspapers. you just let that ride and you didn't take any action to straighten the story?

>> well, i didn't -- >> and you were in charge. >> yeah, i was. but as far as i can even recall any discussion -- bear in mind, you had the prime minister do the statement. you had the dossier. the issue moved on pretty quickly. and the 45-minute thing you say it a frenzy. it wasn't. one or two newspaperses reasonably prominently and if fell away. it was not that big an issue. so proactive, we go to the news standard and say, look, you got this wrong. i didn't. where are the people follow that story up and talk to our press offices and you would have blown it and they probably did but i'm not aware that even happened. e action to correct the story? >> now, bear in mind if we correct in every single store in every newspaper that we knew to be wrong, we would be 24/7. >> bad as i think your area of business, not mine.

i'm very glad to say. like other colleagues who have already referred to the point, i'm interested in a statement in the prime ministers or write to the dossier -- if i can find the correct quotation -- what i believe the incest -- is that the saddam hussein has continued to produce biological and chemical weapons that he continues to develop nuclear weapons and that he has been able to extend the range of ballistic missile program. now, the statement, the assessed intelligence has established beyond s very strong statement. had jic assessments use words, beyond doubt, in describe the intelligence about iraq, -- >> state, i don't know,

can't would need to go and reread it. as i said this morning, prime minister giving his assessment of the assessment given to him. if he were to sat around as he did, many times with the intelligence chiefs and said to them, are you pretty sure about this and about this and about this and they were? john sawer gave evidence he believed the intelligence. why shouldn't he not believe the intelligence. >> what i'm saying you as drafter of this, and prime minister as person who signed it had for saying the intelligence i don't see was beyond doubt. those two words are so definitive? >> not definitive? >> what was the basis? >> the basis was the intelligence assessments that were presented to the prime minister and the basis also the nature discussion of dialogue he had with intelligence chiefs prior to the dossier being published.

>> i find that a little puzzling. i mean, isn't it case and doubts and caveats were expressed in just about every jic assessment on iraq? >> there were and doubts also were expressed in the prime minister's statement to parliament about intelligence gave incomplete picture and you can never be sure everything is right. that is his judgment. when, it comes to it, you can have all the advisers you want and all the military advisors and diplomats and rest of it he has to make judgments, strategic, political, he has to make those judgements to the public and that is what he is doing there. >> but -- >> based on what the intelligence chiefs are telling him his analysis reading intelligence over a period of time of time. >> well -- through a period. ic themselves talked about a step change in terms of their assessment. >> is that phrase they used. step change?

>> jic report in 2001. >> sir william holman in evidence, giving a few things at that were said the picture was limited on chemical weapons in april 2000, and the knowledge of wmd and ba chris tick -- ballistic missile programs was patchy. march 2002, the intelligence on iraq, wmd and ballistic missiles programs is sporadic and patchy. going on, august, 2002, very near to the period we're talking about, there is, i quote, little intelligence on iraq's bcw doctrine. that is biological and chemical weapons doctrine and we know little about iraq's, bcw is misprint. cbw. iraq's cbw, chemical and biological weapons since late 1998. crucially the assessment of

the 9th of september, 2002 the intelligence remains limited. so in august, the jic says there is little intelligence. in september it says the intelligence remains limited on the 9th of september. and about two weeks later the prime minister tells parliament in a document presented to parliament, that the assessed intelligence established beyond doubt. this is why i'm puzzled. i can't make those statements fit together. >> william irvin will have to speak to his statements and i can only tell you from the position i was in, not an tell person, as the prime minister's communications director, alongside prime minister, he is engaged in ongoing dialogue with the intelligence agencies about the intelligence they presented to him. that is his, the way that he decided to put it in public at that time and i suspect when he comes along, whenever he is coming to the inquiry he will stand by

that again. >> so, you certainly stand by the words beyond doubt? >> i do because at that time was the judgment he was to make. butler report talked about things, detailed and so forth and authoritative i stand by that as well because i think the document had the full authority of the joint intelligence committee. it was detailed. it wasn't just about intelligence that had come in last couple days. think some of the caveats were in there. you could certainly make the point as you both sir lawrence have done there could have been more in terms of public presentations putting over the case why those caveats were required, ultimately in terms of what the public would have taken out of it wouldn't make any difference because it was cautiously put case. >> so when the jic

assessments, we we are able, i don't know if we will be able to publish them but we read them, were not to correspond to the phrase, beyond doubt and if members. jic, we already heard is be who served on the jic. sir william airmen. the just doubt phrase was not justifiable would you say the parliament was misled prime minister saying beyond doubt. >> no i wouldn't. >> you wouldn't? okay, thank you can i move on to my final point. broad point from writing what was said this morning you used phrase which i've seen used many times, to describe the threat, the phrase, current, serious and credible threat from iraq. but when the prime minister spoke in the debate in parliament on the 4th much september was reconvened and

dossier had been put in the library of the house of commons he used a different phrase. he said, his, meaning saddam hussein's wmd program is active, tailed, and, growing. now what was, the basis, the evidence, the for him to tell parliament that saddam's program was growing? >> it was, within the dossier. it was the story, narrative he was setting out within the dossier. >> but the dossier doesn't use the word growing. >> the dossier may not but the prime minister setting out what he said from the intelligence he is being presented to. >> but, i can't find this concept of growing -- >> step change is. preparations of ballistic missile program. that is growing. >> we've been through, thousands of documents, intelligence reports and idea of growing doesn't really appear in them. if i can quote from your diary from the 23rd of july,

2002, you record the foreign secretary jack straw as follows. jack said of the four powers proposing a potential threat with wmd, iran, korea, libya, and iraq, iraq would be the fourth. he does not have nukes. he has some offensive wmd capability. turning them from that statement from the for ren secretary to the dossier, the dossier referred to iraq's continuing possession after 1991 of chemical and biological agents. it referred to saddam's continuing capability to produce them. it referred to his covert attempts to acquire technology and materials which could be used in production of nuclear weapons.

none of that, describes saddam's actual program as, growing. so, was it accurate to represent the threat from iraq at this time as growing? >> i said to you many times this morning the reason the prime minister wanted to put the dossier in the public domain the way that he did because he had grown more and more concerned about that saddam hussein faced based upon intelligence being presented to him. and yes, there was the unaccounted for, leftovers and so forth that had been there for awful long time which were not inconsideredable in quantity or effect but intelligence picture being presented to him, he assessed it did show a growing threat and him and the government to be concerned. jack straw i think was making a slightly separate point. he may well have been right if you are going to say which of those four had the most advanced nuclear, chemical and biological

helps perhaps, but as i said this morning the prime minister saw unique threat because of history and unique use of chemical weapons. in part because of means deployed to obstruct the united nations to conceal, the weapons program and also because there is no element there could remotely get into in terms of sort of dial at all. he did see that. as you see when you sit here, a growing threat. >> comes back to the point made earlier as to whether this unique threat had actually been contained since 1991. >> that is judgment, isn't it? >> or whether it was growing. i'm trying to find it, very important to this inquiry, what that judgment was based on that it was growing? >> the judgment was, i, look, the prime minister is the guy to who made the decisions and i'll say what

i think he would say, were here. containment policy wasn't working effectively as it had been. it had changed the context in terms of how the united states, britain, other countries were going to address this issue. volume of intelligence about this address was making him concerned about it. >> all of that can be certainly true without the intelligence saying that the threat is growing. prime minister, becoming more and more concerned as he said in the forward, increasingly alarmed, is the phrase he used is one thing, seeing as threat growing, you understand, is another. >> but ultimately. you can present as intelligence people do. diplomats always do, they can present all the factual

analysis and caveats and rest of it and ultimately prime minister has to make judgments about that and that is the judgment that he made. >> thank you. >> mr. campbell, during the course of the morning you said development of the dossier was important in terms of communications it was an innovation and you also said that these were not normal times. now, decision was made to have innovative approach to giving information to the public what is about the constitutional propriety you have to? because the cardinal principle of keeping intelligence rigorously separate from most making decisions is very much embedded in way constitutional proprieties operate. now given your role, because your trade is communications and you were special advisor

with executive powers is getting the process for developing this, was that actually discussed? what would be the proper way for developing this? because you yourself said, that it is a pity, will this happen again because this goes at heart of public trust. i mean these proprieties exist for a reason. >> correct. >> what is actually discussed, did anybody draw this to your attention? >> was it discussed? yes. were people aware of its unprecedented nature and increase the level of, of discussion and potential concern, yes. was the judgement from the intelligence agencies was the right and property thing to do, yes. >> who did you discuss that with. >> with prime minister, other ministers. john scarlett. people involved in the process. >> was the cabinet secretary involved? was things discussed this innovation. >> cabinet secretary which

would be the discussed about the throughout the whole process. >> did anybody draw to your attention what the conventions are? >> it was unprecedented. >> the convention i'm talking about is keeping intelligence completely separate from decision-make and judgment to put a dossier together with a political forward and information. >> it is impossible -- >> you blurred the lines. >> well, no can't say you blurred the lines between intelligence and decisio decision-making. i guess you can say intelligence became more involved in public communication and public diplomacy hitherto have been. that is development and a response, if you like to the sort of changing media, political landscape that i talked about earlier. were we aware that that was a significant change? of course we were. were we were aware people had concerns about that? of course we were. was it still none less, despite its unprecedented nature. despite. fact that this is the

intelligence, service is being asked to do something maybe they wouldn't be normally expected to do, would prime minister and intelligence agencies say that is right thing to do? i think answer to that is yes. >> given these are not normal times and controversy of this decision to want to go to war whatever, haves listened to you earlier, do you think process was vigorous enough? >> absolutely. i -- this morning i think, the process was utterly rigorous. i thought its its integrity was very, very strong and profound at every level that operation and i think, i really do think we're only having this discussion, in large part because of the subsequent controversy which is frankly just caused by a utterly dishonest piece of journalism. that's the fact. that's the fact. >> okay. >>'s move on at this point

to the dossier. given what you just said, about the, policy of the dossier and the -- >> that is late i agree. >>, but before we get to the dossier, i'm interested in, obviously, good job had been done with the september dossier. it helped the prime minister. was there ever discussion with the jic or john scarlett about the possibility of having more exercises of this sort or was this seen as a one off. >> at that time, i don't think it was seen as one off, you won't ever do it again. but i didn't have any feeling that the prime minister didn't want to do it again. no, it may be the as the situation developed, if it actually, the diplomatic process had gone on, much

longer perhaps there would have been but there was certainly no discussion. >> so, how were you then supporting the prime minister in the dossier in terms of helping get out the factual background, the evidence, analysis, to, support the works in speeches and press conferences that were more substantial documentation around? >> i think the bulk of the, as i said this morning, the work period even during this time when iraq was really quite a permanently controversial and high file issue, there were periods where there were other subjects that had completely taken over the agenda, where most of my work i suppose, would be going. a lot of it domestic, policy-related some other international issues. northern ireland, was always going to be there or thereabouts in terms of being difficult and significant area.

and, so i think bulk of communications would have been things you referred to. speeches, parliament, press club, interviews, the normal stuff of day-to-day political communication. >> could you explain for us to the role of the iraq communications group as you sat on it. >> that really evolved in a way the fact that, rythym of my day if you like, usually see the prime minister first thing. would chair a meeting of main government departments, obviously big government departments, deputy prime minister's office, treasury, home office, foreign office. if there is any other issue going on, other departments would come. and that would be to go through, as it were, that day. now what was becoming clear at a certain point, that iraq was, dominating, we

decided were that meeting continue it would be use you've have once a week. it involved in once a week, sort of met, but then. >> what kind of time are we talking about here? early 2002, 2003? >> yeah. i can't remember the exact day when it started. that became really just trying to step out of the day-to-day the whole time just discuss,, talk and think a little bit more strategically. frankly i used a lot of it for my own education, educational purposes if you like. we had people come along. we set up islamic media unit for example. we had experts advising is on the way, for example, some of the messages we would be communicating very proactively within a british context just, often, will have, we think actually,

you're gaining some understanding of what you're trying to do. we had somebody that would come along and explain to us how some of those messages were being received in a arab and muslim audience. it was that kind of discussion. other discussions would be, i can remember, one to go back to the discussion at camp david, we did have quite regular discussions how we tried to help the americans address address the whole business of americanism. i think prime minister said in a at one point, may have been in a note, i can't remember, this anti-americanism, up until now americans were happy to see it as irritant but the united states was seeing it as a threat. >> narrative right, if you like. >> also analyze what it was that we were putting together by terms of this strategy. the elsewhere, we were taking forward on a day-to-day basis. >> so that was, getting, the

messages right, making sure you understood what you were doing, one is very day-to-day. >> also given this is an area where, i mean it is not my natural area of expertise. not my team. not their natural area of expertise. it was opportunity to sit down on a fairly regular basis with people whose expertise it was. some of them from the intelligence services. some of them from foreign office. some of them from every now and then bringing people from outside. >> what was role of coalition information center? >> that, for that we've got to go back a few years. that all started with kosovo. what happened with, in the communications on kosovo, there came a point where both president clinton and tony blair felt that although the military campaign was clearly, i mean nato against milosevic.

strictly in terms of military balance, but communications and public relations if you like, and public opinion we were losing that particular battle. because milosevic had complete control over his media systems. that gave him complete control of media systems in those countries were there, britain, america and elsewhere. and so, i was asked to go and help nato put together a different communications model, which we did. and we took elements of that, and we recreated a different form of the same communications september the 11th and adapted that iraq. and cic its first incar was really post the 11th. that was the, -- post-september the 11th. all the major different time zones, at that point, islamabad, washington, london, information centers where we're all linked up

all the time, understanding everything, every leader involved in the coalition was doing saying so forth. we brought that forward, post, for the iraq conflict and the cic was the british element of that, based partly in the foreign office, but working, with very much as part of the overall iraq communications. >> so members of your team part of it? >> members of my team. members of the american team. we had, we have a system of swapping. we had a very senior person from the american side who was there. we have, different times, we have french people. we had spaniards. we had polls, australians, dutch. people from all over. >> this was the group that was commission to do the february dossier? >> it was, yeah. >> so could you tell us, how that came about?

>> that came about from, one of the sis people who occasionally attended as expert advisor really, this, wasn't always weekly, but fairly regular, iraq strategic discussion group is how i would have called it really, he informed us that there was intelligence that had come in. which related to the, iraqi campaign of concealment, obstruction, intimidation of the u.n. inshun process. he went through some of the things that entailed which was, not necessarily that surprising given that people knew that the inspectors were subject to certain amount of intimidation. there was also awful lot of interesting detail. now within that, i didn't have a discussion with him and said, look, is any of that, --

>> we don't get too far into the sensitive detail at all. >> okay. fine. i think some of it, most of it -- >> isc. >> well, anyway, so that,, we had discussion whether any of could be used publicly. that decision wasn't made then. i think there were further discussions about that. then word came back, yes, we could. didn't really know at that stage how that was going to be done. but i commissioned, at a certain point the cic to, do a paper on iraq and issue of concealment, obstruction, intimidation and the, general messing around of the inspection process. historically as well as current. started to work on that. and, produced a paper, which

i, which, i think we then discussed. that was fine. i made a, number of, i changed i think the title. i made a number of textal changes in it. it went around the system and all that. >> when you say it went around the system, was that to the jic? >> it went, the answer to is i don't know. there were representatives of jic at that meeting that discussed it. what they then did with it i don't know. then the decision was made on, visit to america, i think this was, the one would have been in february to washington. we were meant to go to camp david. the weather was too bad. we stayed in washington. i think it was that one where the decision was taken that we would give this as a briefing paper to the sunday journalists, the sunday press. there were half a dozen them traveling with us on the plane to washington of the

as it happens it got next to no coverage at all. it was interesting. i thought it was quite interesting. it was there. maybe informed some of the things they wrote or not, but i don't know but it wasn't, contrary to the september dossier which got massive global exposure this got relatively little. and it became, much better known and much more, rather unfortunate, controversy when it emerged that actually elements of it, i know routinely stated it was taken off the internet. it wasn't. i'm not defending but as a matter of fact it was from an article in middle east journal. once that as it were process point became exposed i think it was by channel 4 news, it was whoosh, frenzy. >> can i go back to, a point you just said. this context which was being

done, why was it considered important to have the document on concealment at this time. >> because one of the arguements that kept being put is that, about, giving, you they, give the inspectors more time. give the inspectors more time. a tougher inspection regime, the fact in ideal great, the inspectors go in, they do their job but actually the reason, and people say, if all the weapons are there, why have these guys never able to stumble across them as they run around iraq? answer, there was this system of obstruction, concealment. intimidation. that was part of the debate. >> this came as quite critical point under the process. that has been put to us by previous witnesses that. a hope for a smoking gun would be found and so far, a smoking gun hadn't been found. so doubts were already being raised about the credibility

of the september dossier. >> yeah. >> it was published i think on the third of february. the prime minister became clear when he total parliament about it. but a couple days lit later colin powell was going to make a big presentation to the u.n.. >> yes. >> security council. so, this is not a trivial issue at time. this is -- >> no, i didn't say that. >> this is one of the big issues at the moment and the dossier does describe, i'm paraphrasing a pretty hopeless task. talks about i think, 20,000 intelligence officers 208 inspectors hidings, in saves, hotels, offices. et cetera. so that was the point of it.

i'm puzzled about what you said about this being something is given because the prime minister did pud it in the house of commons. n . the house of commons -- speed the reason i said that is we gave i to the journalist. it got some very limited attention and i think some of the newspapers. i can't remember but i don't think it was picked up by the broadcasters but the fact that the prime minister had been away and was going to make a statement on his return to the house of commons and therefore as it was a document we put in the public debate it was put in the library and the house. >> the comments on february and he said we should fill the intelligence of the week and all the infrastructure concealment it is for old when we publish intelligence reports that other people have some sense of

integrity of security services and it goes on in a single way >> it says the dossier, last year and again in the material we put out over the weekend, it's very clear the vast amount consumed in deception is going on. >> can i just say by the way, the first reference to iraq strategy group is december 11. i have been able to get all the papers. >> thank you. the point i was making, according to the prime minister, was that this was presented as if it had some status, process to the september dossier. obviously much smaller document, but the prime minister certainly, particularly or not, gave that impression to the common. >> look, i absolutely accept

that this, the integrity and professionalism, the meticulous nature of the september dossier i would defend. to the end of my days. in relation to this, somebody within the cic who was putting it together, he made a very, very simple but quite serious mistake, which is he put information into it that the accuracy which by the way is not been challenged that it was from a leading expert by the name of, and was part of a historical section. it wasn't the section that had intelligence in a. that's what made it subsequently very controversial. we didn't know that until later in the process. and that, we didn't know that until the media informed us of that, when the story first broke. and then so that's where the mistake was, and fair to say that, when william shaw talked about trust, that was, that did

not help, put it that way. >> you've made the point, but i think it's worthwhile just, the quality control, if you'd like, of these materials was not there. and though, the question is, whether the jic or the intelligence community were aware the prime minister was going to present in those terms? >> with the september dossier, that was the purpose of recalling parliament. that was the purpose of the prime minister's statement. this meant the prime minister was bringing the house up-to-date on very important set of discussions with president bush. and a very, very part of that was to refer to the fact they would release this document, i don't think you made any reference to the content beyond what you just said. but i totally accept what it's about, quality and control.

i wrote here on the seventh of february, where the very first sentence says, i'm hugely value the work of the cic but the document shows the absolute necessity of quality control. this is particularly for any documents such as this one that includes intelligence, intelligence assessment. and have set up considerable displeasure, if you like him and the fact that it happened. and also as a result of that, i spoke to john scarlett. i spoke to david ohman, and spoke to the secretary of the ford office and jack straw, and we agreed a new set of procedures whereby basically nothing that had any intelligence component whatsoever could be used in any form of public indications. we're now going going through the same rigorous process of the september dossier. >> one final question. which is, as time passes, under

the inspectors of iraq, and matters, the things on file, there is an argument that they were not found because the iraqis are very good at concealing there. but it must have occur to somebody at some time there may be, they would be found because they were not there. was that an issue for you? it did you raise it? as a problem for somebody concerned with the strategic indication. >> that was an issue. it was, it was a big issue. again, i'm just looking for a day, because there was a day when john scarlett actually stated directly how big a problem is it. if all those, the military was

there and do what they had to do, and fighting also, they were looking for weapons of mass destruction. i can remember the reason why when people say, you always knew they weren't there, i can remember being with the military briefings for the prime minister to where admiral boyce and his team were explaining the preparations for how the forces, what would happen if there were chemical and biological weapons use. that i can remember actually feeling absolutely chilled by the nature of the discussion, i believe that when the forces went in they would find the chemical weapons, biological weapons, all the stuff that had been set out in the september dossier. it was real. it was profound. so knowing as we did, that this

was a hugely controversial decision, that a large section of the british public would totally opposed, huge sections of the labor had been a post, to be told it's perfectly possible that actually you might now be facing a situation as if we had problems on the prime minister's play, a situation where you going to have to accept that there are no wmd there. that was a very, very big issue at a very difficult situation. >> did this only become a parent after the fighting, general fried tell us of his surprise, that he wasn't finding anything. i mean, i'm interested in whether or not also the possibility at least occur to you before the fighting? >> i was, i'm in, again, i can only speak for myself. john scarlett warn there may be no finding wmd.

i was, i was never in doubt based upon where -- [inaudible] >> was i saw, was later, discussions i was involved in there so it was a considerable obviously, as the invasion took place, that was the focus and it was i think, as other witnesses far better qualified that i have said to you, perhaps the outcome came more quickly than had been anticipated or plan for. but certainly, i fully expected, and i think the prime minister did, within a reasonable short timeframe, the military and intelligence would say here is this and here is that it is the other from a couple of lads, there wasn't much to report. >> no biolabs, compelling evidence of. >> to answer your question, had we thought about it, to the

extent that people have been suggesting it as opposed to those who are very, very strongly oppose, but as i say to you this morning, when the prime minister is having discussions with sure rocco is fundamentally opposed to the decision that was finally taken, there was never any doubt that, any doubt in his mind that there were weapons there were weapons of mass destruction. >> i think he did suggest it. >> edn in a very dramatic press conference. he did. >> just follow up, one point if i can come back to the favorite briefing paper. server asked you to accept the jic were aware of that, and in your supplementary memorandum of the 24th of june, 2003, to the foreign affairs committee, referring to the paper, you wrote that, i quote, john scarlett attended the four

meetings at which the pursue of iraq's infrastructure of concealment was one of several items discussed at. he was not consulted on the paper, and nor did he see it in final form. he was aware of the fact that s.i.s. had authorized the use of the intelligence material in the public domain, into quotation. isn't it a bit surprising that the jic chairman, who had lead or co-lead with you, the work on the previous dossier was not consulted on a new paper that was also using intelligence material, and then it wasn't even copy to him and draft? >> was a copy to them and draft? >> according to your evidence to the foreign affairs committee, i don't know actually. perhaps it was copied to him and draft a he was not consulted on the paper. perhaps i'm wrong in inference

from that that he didn't see it in draft. >> well, no. at the time, i mean, the systems we put in place subsequently, as i say, nothing like that would've happened without going through not just john scarlett, but all the other intelligence agency leaders. as to whether he did at that time, as i said, he was at the meetings that he was aware he was being done. i just don't know whether those who are putting it together, he was with s.i.s. at the time, would have set it to the. they should have done so. >> right, they should have done. thank you. >> i think that is -- to be fair i think that is a lesson that was learned very, very quickly from that, and it was a very difficult, that was a very difficult episode. >> they should have sent it to him, and he knowing it was happening, should presumably

have asked to see it, to make sure he that did it before it went out in public. >> it very well may be. i can't remember exactly who apart from john scarlett and this other person from s.i.s. was at that meeting. it may well have been john's team who were there. i just don't know. i just can't remember the. >> the difficulty is even john scarlett -- >> winds subsequently went -- that is the point. he probably would have been, i suspect would have been quite content with it and maybe there was somebody from the jic team that was there who was content and send s.i.s., we are perfectly happy for it to be used in the wait was. again, it's the control that came later that if you like contaminate the whole thing spirit i'm just surprised obviously foreign affairs committee asked you to go back, check, then you wrote a memorandum. you must have checked at this point and you must have at that

point to establish that he hadn't been in the loop on this. >> he had been in the loop to the extent he was in all the meetings. >> but not being consulted on the paper. but as you say it should have happened. thank you. >> just for the record, you used the term jaunty, i think referring to s.i.s. that he wasn't of course at the time he was the jic chip. >> the assessment team, yeah. >> well, we're going to turn the question now to a different topic. i'd like to turn on the intelligence aspect and ask you about your work in the period 2002 and early 2003 with regard to communicate the government's iraq policy to the media and public. and answering the public's considerable concerns and questions immediately after crawford, the prime minister set out certain priorities, sometimes called conditions, of supporting the united states,

the top three were taking the u.n. route, and dancing the middle east peace process, and being the support of public opinion. in your diary, you write it was clear that public opinion had moved against us during august. i'm the one if you could tell us how you set about dealing with is beyond the dossier, what was your method or your methods of dealing with this problem? >> i mean, there was nothing terribly fancy or you didn't see, were able to see at the time, the most unprecedented rules of publication of the dossier. we had at one point, or what became the prime minister came, the masochism strategy, which is basically to take him out to

very hostile audiences, because what is used was, and i think he said this in these terms, one of the speeches, he said people are asking very -- yet some people be opposed to what we do, and make. there will be some of those. there will be some people who will be setting why haven't you gone after saddam as longtime before this. there are people in the middle who had genuinely legitimate questions and they were asking. i could only refer to general kaufman and another mp, i have forgotten who it was, but they both made speeches with his series of genuine, legitimate questions. what he saw the communication as trying to do is answer some of those questions. so obvious question, go with the u.n. obvious question, is this just about regime change. obvious question, are you going to do this.

what's the impact for the middle east peace process, where does this leave in relation to the broader what george bush called war on terror. will parliment have a say. so what we're trying to do was answer these questions over time. the thing about communicating, there's no one thing that will get through anyone point. you've got to keep, so we planned, i don't think he thank you for that much, but having said i'm going to go out and take on the people who disagree with us, for example, the day that i discovered about the favorite dossier and it's unfortunate problems of it, will up it is a very long program that i think with an audience we had a thing with where they literally their brief was to go and find women totally opposed to what we were doing. fill a room and the prime minister says that it takes all

the questions and tries to answer them. so that was part of the communications. and the rest of it was just the fact, you know, every week is in parliament. once a month he's got his press conference. fairly regularly at before this committee. out and about, there was nothing that i would say we added, beyond realizing that we're now trying to bring in a more internationalized communications, trying to tie in much more closely to the american spirit because you know, the reality is they are communications, and they did understand that, i think more than others but i think it's fair to say donald rumsfeld's name has been mentioned a few times in this committee, and i think there were times you thought he could have maybe thought about a bit more about impact of public statements on other countries. >> again, almost exactly a month after your september diary entry, you don't iraq is still

tricky, tv just wish the americans would do more to to put a proper message to the worker did you have a american interlocutors who you're able to posture to? >> id. and to be fair, they were always very, going back, i if i can, i'd like you to see the papers that we did around september the 11th when they develop in this way because i think that was the basis. those relationships were very good. i spoke most days do, we had a system whereby if anything, any of us felt untoward or difficult, that would cause immediate attention anyone of us could instigate a conference call at anytime spent what was the aspect of american presentations that you found disturbing or unhelpful? >> i suppose, they have a very different political system. you can't, you know, you can

choose the leadership of another country. i think it was just that question of not always understanding that their statements and positions would have an impact way beyond their shores. they felt very comfortable with the idea of just say, saddam is a bad regime. has been for a long time. it was clinton's policy to go regime policy that that was ours to. as for george bush, i think he got there's more than others in his administration, if i could put it like that. there was at least an understanding to other countries out there, and they had other interests. so for example, to give you one example, where people talk about what was he able to do in relation to george bush. i remember, i think was able seventh, eighth, where the u.n. issue of the u.n. in the aftermath was fairly powerful agenda for whatever reason at

the time. and condi rice was a very, very, she was quite insistent that any words agreed at hillsboro were not too forward in relation to the role of the u.n. and she wanted to say it would be an important role. i can remember saying, that sounds a bit crunchy. and basically, as it's meant to be that the prime minister went and saw george bush and said look, this has got to be stronger than this pic and i think if i'm right, finally they agreed they would be a vital role for the u.n. that was a board when subsequently the u.n. did become involved in the aftermath. so i think the exchanges, the relationship at the very top level between the president and the prime minister, very frank, able to have very, very open discussions, i think it was the same with very, very close and

professional relationship with condi rice pic and i tried to do the same with indications that those days i would speak to the white house, state department, pentagon. if there were problems, says the. there's a problem here. if they would say to us likewise, why do you guys keep going about the u.n. all time with what we're trying to do is keep a republican sum for this and that. that's just the way political exchanges are, i guess. >> one of your problems with the americans was perhaps one which only you could result in your communications strategy. you described your discussions with vice president cheney, and you say crossley, a word you use pissed off in your diary, how crossly he was when you said, when you talk about democracy, coming to iraq, just say, that's americanization. how did you deal with that in

that domestic the? >> that was at camp david. the real substance that day was the prime minister persuading vice president cheney to go along with the president and his subsequent visit to the united nations. but there was this broader discussion where, and again, i think out of a genuine sense of, i think they were quite, because after september 11 the whole world loved america for a while. i could remember the prime minister say, to peter, the exchange that we referred to earlier, said look, for the rest of the world, september 11 was a massive event and a massive moment, but it has. for the americans, it's not going to pass. it's now part of their psychology. so they couldn't really understand why there's so much of this anti-americanism. i thought a serious and discussion about, we were giving them our assessment of what it was about.

for example, i believe this strongly. i think it was about the fact that people, have rolled up on the idea of these two poles, russia, soviet union and america, two great superpowers, you know, that can both sort of battle into the death. that's where the geopolitical framework that suddenly you only have one superpower, and the other countries are looking at saint you've got the power, but we want you to understand that that means engaging as an evolving us as well. so we would have that sort of discussion. and i just made an observation that i felt anger to medications that when they talk about we're going to spread democracy, back to the point about how message in america or britain might be in a totally away in the middle east or the gulf, they are hearing that america, they want to bring america in. and he was, as you sort of eloquently put it, a bit pissed

off. >> may also express your concerns at different times, for the british public there was feelings, sometimes very strong feeling, that britain was only embarking on this course of action with the united states won, because it was what the americans want us to do. and of course, to protect our relationship with the united states. how we able to establish a specific british agenda with regard to iraq? what was that agenda? >> with the difficulty, because, i mean, this was in a sense of the problem of the whole attempt to get mccain on on this, because you had i guess put it in this term, the left of our media, that basically which is opposed to the whole thing, and very aggressive becoming blair is bush's poodle. it was a political hit in that.

and on the right, i think a sense that, i don't know, once you got into the whole dossiers and that kind of thing and the bbc became very, very hostile in its coverage of iraq, it was quite difficult to get out any messages undiluted on your terms other than just through the prime minister giving out there talking. but he was difficult that it was very, very difficult. all you can do again, all the prime minister could do is get out there and explain we're not doing this because of george bushwants us to do the. we're doing it because it's in the british best interest to. >> it would have the course of parliamentary support and depend on some groundswell of public support. at the end of 2002, you propose

a more active strategy, one in which he wanted the prime minister to, even more actively involved. can you give us some indication of what that was? and in particular what it involves the prime minister having to do? >> i mean, by that time, i couldn't tell you what proportion of his time this was taking off, but it was considerable, obviously. and i think he accepted, and the americans i think also realized it was a benefit to their communications in a sense for tony blair being very proactive in terms of communicating issues, the background to the issues indicates that we're trying to make. so really just involve him having a very pretty regular sustained set of activities around set speeches, visits, interviews, press conferences.

>> how did you assess the effectiveness of this heightened strategy? >> i think you can come in the end you have to rely on instinct to a large extent. i mean, we didn't do, i don't know within the government in the poll was being done. i didn't see any as it were, other than the published public opinion polls. at my sense as the debate went on, and this is often the case, indies really difficult on going quite a long debate, there's always a period of which uses deeper public engagement in them, reflection upon and. it is now sort of reaching the stage of massive opposition and hostility. it's true there was opposition and hostility. there was also support. i think there still is. but there just wasn't that much speck in the work he did on presentation and communication, and i know this is a topic that

you are concerned with, how did you assess, and how did you deal with the relative impact on the public mind of the threatens of weapons of mass destruction where at one point you said there was word and the public mind on wmd on the other hand what you call the unrivaled barbarity of saddam's regime itself. what was the balance between these two? >> i think they went together. all the time. yes, it's true that when, if you look at what is in 1441 and the arguments of the prime minister's at the time, it was about disarming saddam hussein with his weapons of mass destruction. but to other issues that one is the relationship and importance of preserving and maintaining that. and secondly the history of the regime. that was an important part of

the communications, because i think, people have short memories. you have to just keep reminding people that when we just talk about war, we say 1 million casualties, you know, people hear that and then you have to kind of find ways of saying, well, listen. so rather than just a, you might look for a list of all the towns that have a population of 1 million people and then people go, oh, yeah, forgot about that. i think it's one of those incidents that the impact of the time was profound but now we say chemical weapons and yeah, i remember that. so there's a sense you're trying to get over to people that when we say these things, it annexation, the desk juan, the intimidation, the taking of the tongues out of people who speak

against the regime, you know, it's worth listing to some of that. worth understanding that is why the prime minister is so concerned about this regime. the regime that is used chemical weapons before. was to stop him from doing it again. particularly at the united nations walks away from the. >> were enough people listing? were you getting any sense? >> i think, again, we're just people. public opinion, that just means what you people think that no two people think about every issue. but i certainly have a sense, i can remember for example, the day of the debate for example, specific parliamentary debate, you discuss something messages from people, not necessary in the political, you had a sense of the country following the debate as it unfolded. on never forget, sometimes i used to run to work and

sometimes i use to get the 24 bus, and i can remember listening to a conversation of two women on the bus about resolution 1441. on their way to, give, they were talking about what resolution. and i thought, people are engaging on the snout and a deeper level. it's gone beyond that kind of flimflam that really represents, passes for debate in the media today. people were engaged in the debate. >> and my last question on this, relates to the extraordinary demonstration on the 15th of february, 2003. which passed him as a people, including two of my three children walked through the streets of london protesting about the iraq war and it was said to be one of the largest demonstrations of recent times. what account did you take out the strength of public opinion? how did it inform the prime minister's preparation for what

was going to be this very important parliamentary debate? >> well, one specific way, i think the day before the march, i think i'm right, we were in scotland. i can't remember -- the march was huge publicity and build up. it was clear going to be an enormous event. you've got to remember, this is bureaucracy. the prime minister was intended to stand for reelection. he knew that this was a deeply unpopular policy, and not just unpopular by some of the other issues that were not popular, fees or whatever it might be, this was key. i does have a will, if someone has a march, you think about. so there's a lot of people who oppose. what it definite, look, there was a political consideration. there was a big protest.

and he thought about that a lot. he sees the significance there but ultimately, i think it just made him think more deeply about the issues. and the day before, i think, i will check the correlation of this, but he did a speech. we met some iraqi exiles at a hotel in scotland who got in touch with me actually, it said because they sense the u.n. think one wrong when it was over, they came and said look, please come he's got to see this through. he's got to see this through. we've got family back to. you've got all these people in the march. no doubt well-meaning, but they just do not understand the reality of this regime. please, i took some of them to see the prime minister. and he then made his speech where i think the line that was taken out by the media, he called the moral case of the war. because people were talking about the moral case, those on the march, the moral case for an

action. in the prime minister really just sent out, there is a different view to taking. and ultimately, he didn't -- he always used this word, you know, he said i don't disrespect those who come to different conclusions. but he's elected as the prime minister of and i saw that seriousness with which he took the decision. i saw how much it weighed upon him, but equally i saw somebody who fundamentally really deeply believes that unless the world confronts saddam hussein at that time, ultimately, suddenly in the way because the diplomatic field, there would be a bigger day of reckoning later on and i think he still believes that the. >> was this moral case one that you've were then able in the short time remaining before the debate, you are able to promulgate in some way through your own efforts of? >> well, he made a speech and speech got considerable public

attention. and then up to -- i don't think i would say at this time, and terms of the really big moments, i mean, yes, we all drafted, we all chipped in and so forth, but when it came to the speech in parliament, that was very much the prime minister's hand. and yes, people were feeling and so forth. that's what i always find, like him i understand why people reach a different position. you have members of your -- i could remember the monday after the march, there were several people within the root who had members of the family dog on the march. i think a majority. so people knew from within their own households how divisive and how difficult this issue was. that's what i say, yes, people can reach a different conclusion. but for heavens sake, let's do away with all the conspiracy theories that it was about oil,

about george bush and tony blair want to do. somebody who has been elected prime minister wants to get reelected, does not do something as difficult and controversial and less they really, really, really believe that they should be doing it. >> and you yourself have no doubt about the moral case? >> i supported it right the way through. one of the doubts was whether you would survive. i remember myself, and sally morgan, actually say, are you sure about, are you so sure about is that you're going to put your entire reputation, the lot on the line in the way you seem to be. and i think it is recorded in the diary, he said look, saddam has been a threat far too long. the world has stayed away for too long. sometimes you have to do the right thing regardless of what people around you may be saying. and t. believe that. i respect him for the way he did that. and i supported him the whole way through, with doubts of course.

and sometimes you think the americans are being, you know, and possibly difficult to deal with on this or that. of course you did. but that doesn't explain the british, the british government in my view has to stand up for his own policies and always. and i think it's wrong for people to come along and said it's all the americans fault and the rest of the. i think britain as a country should feel incredibly proud for the role we played in taking one of the most brutal, barbarous regimes in history and now you've got a few weeks down the line collections which look like they're going to pretty pretty well. >> i'm going to call a short break to give us a short breather. and it will come back for about a final half-hour, if that's okay. >> was to go? >> some tidying up. and sir roderic lyne i think has got a question set to do with government process. >> and they wear during the aftermath? >> and that should finish it.

>> i will turn -- >> can i do say the moral speech of the day is the march. >> moral case speech. >> thank you for staying all this long. just got a few questions to finish off with. question of the way the cabinet was involved in the policy as a whole. in your diaries, pretty illuminating on cabinet discussions on iraq. jack straw i think said that iraq, cabinet discussed iraq 28 times between september 2002, and march 2003. but the report commented on the

fact those remarkable assets for this cabinet discussions. why weren't their papers for the discussions? >> i don't know of. >> you don't know? >> my job is not preparing papers for cabinet. >> but you were an intimate adviser and number 10. you might have known why the cabinet discussions did have the sort of papers that would be normal and cabinet, but you don't know? >> no. >> my sense though, there were a lot of debates and meetings with the smaller group that i talked about earlier. prime minister sometimes john prescott, jack straw unter and then there was a broader cabinet came into being in gordon brown, and i can't remember the whole grouping, but that certainly would be a group of people that i simply assumed was being served with papers properly.

>> the cabinet as a whole had to take responsibility for the decision, as of course subsequently did parliament. clare short, cabinet minister at the time, said in her book and honorable deception, there was a great difference between the cabinet being updated each week on the events they are reading about in the press, and any serious discussion of the risks and the political diplomatic and military options and hammering out of an agreed strategy to handle the crisis. now, did they cabinet, in 2002, ra 2003, as one approach to conflict them at any stage have a properly informed debate, not a briefing, about the strategy? >> yet. they did. look, i think the prime minister was set in a different context, that if he saw the first time he

was aware of a difficulty within the cabinet or people who had very, very strongly oppose, when he as the leader of the cabinet, the prime minister was saying were doing, if the first time he knew about is when they got to the cabinet table, he would take these political systems were not up to much. it's true there were lots and lots of discussions outside cabinet. and i can see why sometimes people might have thought, well, he's just going to bring us up-to-date. and sometimes that was all that was in the sense to do. but i was certainly present at cabinet meetings where really pretty vigorous discussion went on. and also where i think those inner people, for secretary of defense, secretary deputy prime minister, that people who were involved in the ongoing discussion that was really sort of 24/7, they probably would be taking the lead. but then i think what others

were doing that work currently involved in the day-to-day formulation of policy, they were challenging, testing, we talked about one meeting where i think david block at and margaret and others who were raising questions. often, i think, was a charles, but often would be both he and the chief whip getting very, very frank assessment as to what people were saying, what people thought, what their concerns were. and the prime minister then having to engage in that. but you will know from your discussions with him as well, i think sometimes he said, you, the last labor just to have capital at the cabinet means that when overwater today's. i think the prime minister would not think that was a very effective form of cabinet government. he would know what his ministers and his colleagues were thinking or concerns they had.

>> why was at the suggestion for a development included in this circle of people? given that her department is going to be the lead department on questions to do with humanitarian and quite a lot of the dealing with the aftermath of the conflict as well as with its consequences? >> that's a very good question, and i think in an ideal world, the secretary of state for international development would, should and could have been in all of those discussions. i mean, how can i put this? i think it's fair to say that when -- let's step back a bit. capital government, people talk about rumsfeld and america be difficult for the president sometimes to deal with. cabinet in the end, they appointed from within a fairly narrow, for mp's, is somewhat a small number. and sometimes you have to make,

you've been there when john major was putting together a cabinet. sometimes you're putting together political factors. >> i did what any political at act than. >> you know sometimes a difficult it is to organize a reshuffle and put together a cabinet. so the point i'm making is you have a collection of individuals of variable competence, of variable trustworthiness, and the prime minister's eyes, and sometimes he would want to have discussions with a smaller group of people. >> are you implying in your deeply diplomatic way, that the secretary of state for international development was not regarded as trustworthy, or as competent? >> when clare short was, and her department were in support of government policy opposition, and i think she was both trustworthy and competent, and i

think the people you can talk to say she was terrific at every level. during the kosovo crisis, go back to that. and declared it an awful lot pretty extraordinary work at the time. but it's not a secret here. she was very, very difficult to handle at times. i think sometimes the military, and i think that emerged in the evidence of some of your earlier witnesses. i think the military found the approach to them quite difficult to deal with. i think sometimes there probably were concerned at times about whether very, very sensitive and tightly held conversations as to whether any political environment where the sometimes you would be all worried about the punk woodgate out in the public domain that you did want to get out in the public domain. >> because she was difficult. her department could therefore be included for the come into

work, they did proceed as we heard from earlier witnesses, the iraq options paper of march 2001. she heard about it later and complained that. >> i find that surprising. >> you find that surprising that it was sent out from number 10, but they were not on the distribution. that wasn't a sensitive document that she offered an intelligent routing and she says in her book in september 2002, and initially was told by as i is that she could receive a briefing on orders from number 10. a similar story of a military briefing, what were the consequences of this for the governments as a whole ability to ban effectively for the aftermath of the conflict? >> again, i'm not an expert on that side of government policy and planning. i mean, i think it would be

obviously if you had really good, strong harmonious working relationships right across the government, then i suspect hopefully your government machinery and its operations would be improved. and i know that there were times when people who were out there, you've heard from some of them. you just had a sense if it was just a bit disengaged of the whole thing. were ads in previous business wage and we're clare short was very supportive of there will of the government, those people would be able to get stuck in. i think it was something that was difficult, but i hope, correctable in a very short timeframe, i don't think, for simple, i don't think you can say that was the reason why things went so, as bad as he did in times of the aftermath. it would have helped if we have better relationships, certainly. >> just turned for a moment on the minister of defense, where

they effected a bit by this inner circle factor as well? the cds at the time, admiral lord boyce, has told us that he wasn't able until rather late stage to talk to the head of defense logistics. were you conscious they were under constraints of? >> as in not being able to play because -- >> because they had not been given a clear instruction or impede approval to do things that might become publicly obvious in the autumn of 2002 when it was publicly fairly obvious that contingencies were being thought about. >> i think on that, that would be because, the prime minister is in a sense, he's got this diplomatic strategy and possibly that time that's what he is right to push the hardest as it were. and i can see why, i certainly was aware of at times the military, get on with things that and i think the prime

minister had very good relationship with the cds, was able to speak very, very openly and frankly to him and give him a very frank assessment of what was going on and what he might need. but i think, i don't remember the detail, but i suspect what was happening there may have been perfectly dismal political considerations at the time that led the prime minister is to say, let's just hold on. for now. but i can remember, before crawford mike boyce and his team were at least thinking about planning, just because they knew that americans were planning. >> so this is right back in march of 2002. that they were thinking about. >> i think, everybody was aware that there was, the issue was on the agenda. the prime minister is being pretty clear that conflict is not in evitable. he has to be disarmed. and i think i record in my

diaries, a meeting for crawford where of my voice and, to his credit, i read this the other night, i think he's right in your saying, look, if this is going to happen, whatever timeframe, we need to think about the aftermath now. >> were you encouraging lord boyce to be more optimistic in his assessments, he said without naming who said this, that when he came to us, that he had never had any hesitation in making his reservations about what was going on there that and i think in particular you're referring to standing up the operation. and indeed, i quote here, was taken as site from time to time to say, can't we make it more of a half-full rather than a half empty assessment. can you know if that is the sort of regime i could used in? >> no. i so after he said that, the financial times ran a story that was me. i certainly don't member ever

saying that to mike that there was always before those meetings, i'm little bit of chitchat and you might say look, the prime minister is in a bit of a mood or he is fed up with this or fed up with that. as you know, i would never encourage anybody to be anything other than totally frank with the prime minister. that was the approach i was tucked and the same approach i would take. >> if i could just sort of now turned a little bit to the aftermath. you obviously in your central position where one of those who were thinking about the aftermath, including about the communications aspect of this. and i believe that major general tim cross at some point i think cayman had a discussion with you about the way that the post-conflict was being handled. and in particular, the military team, and he said that you're happy to see him and

subsequently, produce some support for the media team. would you like to say a little bit about your perspective from number 10 about how the coalition prepared in the run up to the conflict for what was going to happen after the military campaign, and how up until the time that you left number 10 in august of that year, you saw the post-conflict situation being handled by organizations with names like, which may ring a bell with you? >> as i said, admiral boyce, the prime minister, others, from very, very early on, before there was any real understanding that there would be military action, it was plugged into the thinking that should there be military action, the morning after planning has to be done on

an ongoing basis. i think it was a lot of planning going on. i certainly saw pieces of work that came down from different parts of the government system. >> where? where was this? >> within different departments in government, and also, i know that we probably were led to believe that state department and the states were taking the lead and a lot of this. of course, they were taking, they would take the lead of the military operation, and i think that would lead to an acceptance and understanding, they would be dominant way involved in the aftermath. >> was a moment at which he discovered the americans actually had been planning property for the aftermath? yes, there was. >> described at. >> for me, it was, i mean, certainly tim cross, to see me was a bit of a revelation. he was very, very, he made a big

impact on me. and i think he told you, you saw if there is any space in the prime minister's diary, and he came and saw him because he had been to the state and he'd been to that meeting that he described to you with the secretary of defense, it and i think we had been constantly saying is the planning, is it being done and getting ushering is back. and i think within what the british government could do, i think it was a lot going on. accepting, as everyone does, that any post-conflict situation is going to be for the lack of clarity, there's going to be difficult is, everyone accepted that. but i think there was a lot of work on the spirit is it fair to say the british government at this stage allocating british resources to the aftermath because we working on the assumption that united nations were asked to going to take the lead on a lot of that? >> i don't know is the answer to that question in terms of what discussions there were at the

time to. >> we heard from earlier witness in. >> i think we both saw in terms of the political policy slashed diplomats of this, and i thought jeremy greenstock, and seemed to try so hard to take down the u.n. route, that the u.n. perhaps minus america, were understood that it would be, we would find it easy to get the u.n. the vital role that we thought they should have. in terms of financial planning, i don't think so. but i was a really involved in that. that kind of discussion. but i think there certainly was an assumption, assumptions were made about state department plan, and i think that once we had realized that actually the pentagon appeared to be taking the lead, on this aftermath, that i think from that moment on, the prime minister, he was

rattling a lot of cages within the british system and asked for an awful lot of things to be done in. >> did it go badly wrong? >> yes, but not only for reasons that you can, again, it's back to the point, there is no one simple think that you can't say it was all dog rumsfeld or only if clare short has been getting along better with the prime minister at the time. i don't mean that. i think what happened was perhaps there wasn't that great in the immediate aftermath. and again i'm speaking here way out of my knowledge and expertise, but there wasn't that great. that the invasion, people have talked about catastrophic success there, very, very quickly. and then it became a security problem. and then once i think, once al qaeda and the iranians in the way they did sort of a light in the way they did, kind of a lack of grip secret problem became a

really serious security problem, and in that event affected beyond every aspect of all is going on there. again, tim cross, a lot of concerned that he talked about when he first came, i think they were real concerns, genuinely held, but probably sort of in a fairly short timeframe, once you manage to get people in there who are capable of sorting. but once the security situation developed as it did, you didn't have this obviously very kind and mike boyce talked about this as well, philosophical approach between british and americans as far as finding wars and peacekeeping. and so prepared a time it was clearly very, very difficult. again, on my side of things on the communications side, i did what i could. i sent half a point, at one point i was going to go in there, but i think there was a worry that it would be british,

the americans are very sensitive to the british taking over and so forth. i said half of my office out there, and tim cross, on the communications side. i eventually did a plan which i have been trying to find and have not been able to find it, but i saw john reply to. but we did a plan for two mutations structures based upon what we had done previously, adapted to a. and then john from the foreign office had been running for cic, he went over there. we put together a pretty detailed communications plan. lots of the other bits of just didn't get filter any end one end one of the guys ended up working in the iraqi prime minister's office that i think the guys we sent to a really, really good job in an incredibly difficult circumstances. but on the bigger picture, i think that the media lack of grip became an incredible difficult secret problem which

took a lot of time to resolve. >> yes press today your support for the policy that was followed on iraq with very great conviction. do you consider now that it's been a success, and looking back on it, what lessons would you draw from it be on the points that are already been made, just now about the aftermath and that what regrets, if any, do you have? . . we played in changing iraq from what it was to what it is no becoming in the potential impact that has on the region. i think for example libya and the moves it made in relation to wmd, i don't know because i wasn't involved in the discussions but i wouldn't be surprised and partnering to say

that these guys were serious about this issue. i think, i saw the prime minister as closely and probably as often as anybody else and i i saw some giving up really deep conviction and integrity to us making without doubt the most difficult decision of his permission. knowing that there would be consequences. but always understanding what questions had he taken another decision. i felt he was really glib about the potential of the relationship. >> looking at the huge cost over now 6.5 years, at the effects on the stability of the middle eastern region, at the development of international terrorism within its unturned iraqi comment do think the over

policy has succeeded? >> i do, but not without reflecting often and realizing the importance of the caveats that you just put into there. i think your relation to the middle east peace process and on the roadmap is still the outlying and the prime minister did get the americans to go down there. i don't think he can be blamed with such the progress. i think in terms of security, yes the death toll has been high. in terms of iraq as an obviously an loss is tragic, but it is obviously waiting humbly in the process was particularly obvious to the prime minister. but i still think that when -- i mean, he had -- and i thought long before september 11th.

he was going through the potential link between wmd, terror groups, this is the agenda that he saw that had to be addressed by leaders of the democratic world. he raised it in his very, very first meeting with george bush. this is going to be an issue of your time. i was two for september 11th. and i think that things could have been differently, almost certainly any decision you can go back over, but i think on the big redshirt all the leadership that he showed on this issue, i was privileged to be there and i'm very, very proud of the part that i was able to play. >> final question, can we just

have a couple of questions and some more reflections from you. the first question you described before the break about the shock that this corporation was going to need and may not be in the wmd. when did you first realize how difficult the aftermath might be that would strike you in the same way? >> early. seven days, i think seven days after the invasion there was a meeting of which john scarlett talked about some of the real difficulties in the war in the sense of the americans really not knowing, not tearing to have the plan we thought they did really quite became the question. the >> what was the response? what did you think you could do?

>> as much as i could do -- i think that from that point on and i have not read all the papers beyond my time, but of those who have will say and i certainly obviously kept in touch with the prime minister after i left downing street. he is the more problems and yes they are very difficult to resolve. i think at that point david manning talked about the americans were there with a period with a loose focus and not had the same top of all the problems. so there's no doubt there was, excuse me, a very difficult. and then in terms dashed >> and then in terms to reflect on this debate that's taking place in march and the polarization in the country. did that make it difficult within government to have a

reevaluation with iran because the states would be ran so hard that a few were standing back from it you might even be seen to be edging to the other side? >> you see, it's true that the country was clearly very, very decided or the parliamentary party was very divided here at within the cabinet, there was a lot of genuine support for the position. obviously, robert cook eventually clare short resigned. support there was strong. i think the question of it seemed to be pertinent the issues of concerns have been raised. they weren't the nature of let's fundamentally reevaluate the situation here. the position was saddam is a threat in the eyes of the

british prime minister the british government a greater threat and he had to be confronted. he had to be forced to face the united nations obligations. that remained i think the case the whole way through. taking obviously every aspect of policy was looked at different different times in different ways. but that didn't really change throughout the whole thing. didn't make it more difficult the fact that there was so much public opposition? >> to think there is perhaps more of a focus on the war itself in the aftermath, that it was -- at the big decisions that you have to face should change place were not given the same attention as the u.n. >> my memory connection is that all of those issues were getting very, very large public debate.

but it's true that after the invasion, when they sent a letter about the issues that would be going through. and again, this could be my memory not being that great, but my sense is that the aftermath and in a sense didn't become as big of a media and political issue at the time as a fine been frank that it probably shouldn't be. and i think maybe if it had the corrections that i did take place, might've happened. >> this is a consequence of the intense political debate. >> don't forget as well, within the british political media system, once the bbc broadcast a report in may when the prime minister first went there. that really to a large extent

just took over the debates. it was another of the very, very unfortunate consequences of that. so actually there was probably less attention, less focus, but what was there actually happening in iraq an immediate level of the political level than it should've been. those were getting into iraq, military, intelligence guys and sort ofho are trying to restore some kind of civil administration and public service and so forth. they had a tough job. but i tend to agree, not as an expert and not as somebody who knows about it as much as the people on the panel. but i do actually think i tend to agree with john's assessment that actually given the circumstances they did a pretty amazing job getting things that eventually the way that they did. >> i think we've been pretty much come to the end of the

session. question to you, mr. campbell, have we given you sufficient opportunity to wes to give your lessons from that whole experience. >> real world? the mac of real-world lessons. >> yeah, i would just say a couple of points really. as is lessons learned, i think looking from where i am now, which is out of government but obviously still follow things closely and still say in touch with a goal. think every sense with alert some of the wrong lessons in the relation to strategic problems. whenever anyone says relation to afghanistan, why are we? that is a communications issue. i was at a conference organized at the british minister of afghanistan. they seem to think lots of other ministers there really seem to

think post-president is 30,000 extra troops. but they just kept saying we're not getting the case of her. now that's all that communications is. so i think if i can say in terms of lessons learned, i really hope that because of all the problems we talked about today because of the events that followed from that, i hope you don't sort of say let's go back to a very old-fashioned sort of communication that doesn't understand the impact of the way that the media has changed. i mean, 24 years, embedded media who are able to communicate right around the world something they see their intensities the snapshot here in a snap shot there. the political issue then is to show the big picture and keep the public whether it's in america or britain and any other country in the world engaged in a boston. and then what it is in a

national crisis coordinate that internationally. i hope the conference in afghanistan in the near future will look at that and go into that. and then the other thing i would say is that i think it's ultimately, there's a point world theo visors you want whether it's people like me or the diplomatic in the military and the end. but ultimately the guys who are at the top, they do finally have to make decisions. and i hope that as a result -- and totally understandable remaining divisions and difficulties of the policy of iraq that we don't put a future generation of leaders in a position where it be really, really, really difficult decisions can be taken. >> thank you. so i'd like to thank our witness in particular for agreeing to stay on for a much longer session that we originally were

foreseen. and everyone in here both this morning on this afternoon. i'd like just to see a brief word about tomorrow. we're going to look at other important aspects of the ministerial and official decision-making process on iraq. and using resourcing and the capability of government departments to deliver their policy objectives. we'll be hearing from the secretary at the department for international development from 2008 to the end of our period. and from the cabinet secretary 2006 to 2005. and with that, t a start tomorrow. i will close today's business. thank you very much. >> virginia's new republican governor was sworn in over the weekend and he delivers his state of the commonwealth speech tonight. live coverage begins at seven a clock eastern on c-span. bob make donnell is virginia's

first republican governor in eight years.

now vermont's governors jim douglas state of the state address. governor davis is serving his final year in office your first elected to a two-year term in 2002. he announced last year he would not run for reelection. he speaks about education and the unique characteristics of vermont. the state capital in montpelier. this is about 40 minutes. [applause]

>> thank you. each morning the people of our state awake with a simple hope, to build a better future for themselves, their families and for the generations that will follow. throughout our history, vermonters have mustered the strength to meet each day with the wisdom, ingenuity, and tireless work ethic of her yankee forebears. from towns, villages, and cities they've collect good representatives to bring that same focus to the people's house. it's here where we carry forth our proud tradition of self-government, always arriving to forge a state, nation, and world better than before. today that work is far from done in these uncertain times we must transform our public and economic framework by redesigning how we deliver state services and refocusing efforts to create jobs and ensure economic security for

vermonters. out of necessity, and because it's the right thing to do, we must now act to write the next chapter in the proud history of vermont. as we gather to embark on this work, let us keep in mind our friends and neighbors serving in iraq and afghanistan and those who are preparing to leave. our servicemen and women are asked to defend self-government in individual freedom freedom in a part of the world where there is too little of both. their efforts contribute to a noble legacy, forged by vermonters from the battle of bennington to cedar creek, from the beaches of normandy to the streets of baghdad. these brave men and women embody the best of the vermont spirit and their sacrifice inspires us all. [applause]

[applause] >> i've seen time and again the will of vermonters to change to reform and to make better this great stage. i've seen what can be accomplished when we are together, putting the public good before self-interest. indeed the last decade has been full of such a complement. and it comes to keeping our neighborhoods safe, there will always be more to do, but our shared commitment gives me confidence that we will be ever vigilant. i'm proud that we've worked together to send a clear message to predators that they will be prosecuted and severely punished in vermont. and while illicit drugs still

destroy too many lives, to deter program has increased our efforts with better education, prevention, treatment, and rehabilitation for those who suffer from addiction as well as strengthen against drug dealers. vermont's commitment to our natural resources is unwavering. the clean and clear action plan as a model for how government, citizen groups, farmers and others can work together to reduce pollution in our waterways. we've lead on climate change by partnering with other northeastern states in the regional greenhouse gas initiative and we were the first state to join california and adopting more stringent standards for automobile emissions, ultimately forcing the federal government to follow our lead. our environmental leadership was a source of pride that sets us apart and gives us a leg up in the green economy. that vermont is the healthiest it comes as no surprise. it's in our nature to be a good, to enjoy the outdoors, to eat healthy. we've taken our message to

younger vermonters with our healthy kids program to working vermonters with their worksite wellness program into older vermonters who let commission of non-healthy aging. we've achieved groundbreaking reforms of their blueprints for health, the global commitment to waver and catamounts house. in just two years we've seen are uninsured rate drop a 25%. and with the blueprints were beginning to bend the curve on cost by combining coordinated care, health information technology and payment system reform. we are eliminating duplicate data unnecessary services and creating a more effective health care system. these commonsense approaches are not only being emulated in washington. they're delivering real results here at home. rhonda rose of st. john's barry has a blueprint for success story. rhonda's chronic illness was a significant challenge training their bank account as well as drawing heavily on state

resources. her community health team stepped in and made a full assessment, taking the necessary actions to get her house back on track and prevent expensive emergency room visits. not only has rhonda's health improves, but she's been able to go back to work and is enjoying life once again. i'm very pleased that rhonda is able to join us today. [applause] as we look to make programs and services more affordable we need only to look at these achievements, particularly in health care as a beacon to the kind of positive change that's possible when we work together toward a common goal. in that spirit, we must partner again. our successes are threatened by massive budget shortfalls, some funded by abilities and the broken system of education

funding. working families have been battered by recession and employers weakened by state policies that are barriers to job creation. the trajectory of the vermont economy for the next decade will be shaped by our decisions this year. if we are content to live out of this recession, hobbled by flat job growth, we can choose to recycle old ideas and hope for a different outcome. but if we want to spring out of this recession, strong and nimble, we must have the heart to reform, the wisdom to act on the kurds to stand against those who will say it cannot be done. mere recovery is not enough for vermonters who have persevered through those long season of decline. we must strive for a healthy and growing economy, prepare to compete with states next-door and countries around the world, prepare to compete and win. these times demand new thinking. they demand bold action and they demand it now.

a balanced and responsible budget is at the core of getting our state on track. make no mistake, there will be many on annual choices on unworthy priorities. the solutions required to close the gravel and very well drop the objection and complaints, although we will consider constructive alternatives, this is not the time nor the place for the reflexive defense of the status quo. if we put up our decisions for another year will be left with a candlelit devastated a half a billion dollars over the next three years, our worst choice so far. two days ago we took an important step in the right direction when i was joined by a legislative leader who announced the results of our collaborative effort to find sustainable savings. representatives over hosie and sweeney senator snelling and my administration worked together on a plan that will save $38 million in the general fund next year, resulting in millions more in savings down the road. this is the type of break from

business as usual that is essential for success. by setting this agreement and law by the end of the month, we can move forward with greater certainty on the tougher budget challenges ahead. access to our courts and a timely resolution of cases is one of the fundamental obligations of state government. ensuring that vermont's traditional system is sustainable is of utmost importance. in the past year, the judiciary has pitched and to help meet our fiscal challenges while furloughs in the court closings were necessary, they're not acceptable long-term closings. the recommendations on judicial operations provide a blueprint for a stronger and more affordable system of justice. i know some ideas were controversial, some changes to part from long old traditions and the necessary rebalancing will affect certain districts and constituencies. but like all of our decisions this year, narrow interest must take a backseat to the the broader public interest.

the general assembly must give these recommendations due consideration, finding and then as i have a path forward. these are just two steps in the process of building a balanced responsible and sustainable budget of spending a plan that is on january 19 will be formed by these and other efforts on the way to address our $150 million shortfall. with 40% of total state spending in human services, many of the tough choices we must make will affect this state. service providers less refined efficiencies, some beneficiaries will have to accept reductions in order to reserve an effect for the most foldable. still some programs and grants will be significantly reduced or eliminated. but we will lessen these impacts by redesigning how we deliver services, to assure that vermont safety is found even in the most challenging economic times we must reform.

our redesign system will be easy to navigate with a single point of entry on flexible options, catering to individual needs. will work with service providers to these their administrative burden. our focus will be on outcomes for vermonters, providing a clear and direct path back to health, employment, and independence. success will be measured not by how much we get, but by how well we help her munter's move from the systems to self-sufficiency. while our budget deficits are daunting, we must always keep in mind that they are a symptom, not the cause of the everyday challenges of the people of our state. last year of her munter's made a house call by nearly $1900 for the year before. our workforce has shed more than 10,000 jobs since i tober of 2008. in vermont's population is among the slowest growing in the nation with more people leaving the green mountain state dan moving in. these numbers tell a sobering story.

if we want to keep the jobs we have, if we want to get our small businesses to succeed in the global economy, if we want to attract rather than turn away people and potential companies, we need to focus on the fundamentals. employers of all sizes in all sectors of made clear what they need to restart the engine of our prosperity. lower taxes, universal broadband and wireless, reliable affordable energy, a well-trained workforce and an education system that is top notch without being top dollar. got [applause] a vermonter with employee doesn't need an unemployment check. a vermonter doesn't need state assistance to help you the bills and a young vermonter with a stable job and put down roots and strengthen the community.

that's why i call on lawmakers to join me in putting the economic success of vermonters first. the single most like consequential action we can take to encourage a healthy economy was to address the pressing weight of vermont's tax burden. time and again employers tell me that our heavy taxation is stifling job creation, making it more difficult to retain our next generation. increase in taxes yet again would only hasten our disturbing demographic and employment trends. to spur job growth we need to take steps to roll back last year's key tax increases, encouraging growing companies with urban incentives to shore up the unemployment insurance trust fund for the responsible and balanced approach. as you might remember, i opposed the income and stay back on track tax increases last year. those changes have swelled the ranks of vermonters who are looking at others they like new hampshire and florida for their new permanent residences. for those who are quick to say

good riddance, think again. when we lose a longtime vermonter to another state, we lose the community involvement, we lose the charitable giving and we lose those deep roots to give vermont its unique character. not to mention the tax revenue. while my first choice would be to unwind all of the increases at once, that's not feasible in the face of our current condition. instead we must address the critical components most is your mental to job creation as soon as possible and commit to buy back all of the increases plus make additional tax cuts when the economy improves. governor snelling's plan to respond to the 1990's was revoked many times to justify tax increases. but one key element of that plan, one that made it palatable at the time was omitted. i asked the legislature this year to honor the second critical part of the snelling plan and enact a sunset first tax hikes while continuing to lock down the income tax rates.

[applause] this action will send a clear signal to vermonters and businesses that were listening to their concerns and working to meet their needs. further the estate tax increase last year to collect a greater portion of assets to seize vermonters. this change is particularly unfair to farmers who are not easily mobile but a punitive tax that discourages farmers and small-business owners from passing along their lives were two sons and daughters.

>> the program has helped employers of all shapes and sizes from small firms such as vermont timber frames, to medium-sized employers like sb electronics, to large companies like green mountain coffee roasters. as long as our tax burden remains high, i propose eliminating the veggie cap to keep pace with the growing demand from the potential employers. these national polls are a critical step in our efforts to restore employer confidence. and send a message that vermont is ready to compete for jobs. unfortunately, the aquila to the effect of these changes will

still not equal the inevitable increase in unemployment taxes. that's why we must act issue to make our unemployment insurance trust fund solvent. a modest reduction in benefits coupled with phased-in increases and taxable wage base is the prudent course to getting this fund back on solid footing. there are additional investment and economic development that we can make now. i renew my call to use nearly $9 million from the federal standards act for job creation. this money will help train workers, provide access to capital for small businesses and farms from promote tourism and enhance our telecommunications infrastructure. importers have told us what they need. now is the time for us to listen and act. when a company comes to our state, with 50, 30, or even 15 new jobs, we trip over ourselves to welcome them. when a private employer is looking to expand or move elsewhere, we worked feverishly to keep them here. we have such a company, one that

employs hundreds of vermonters in good wages, makes hundreds of thousands of dollars in charitable contributions and pays millions in taxes every year. yet some are eager to shut it down. the decision of the vermont yankee is central to our economic future and to maintain a clean energy portfolio and it's a decision that should be left to the federal and state regulars, away from the political fray. for the hundreds of vermonters employed in vermont yankee, and many more will benefit from its economic impacts, for the thousands of vermonters whose jobs depend on our competitive in electric rates, and for a stable clean energy future, the legislature should vote to let the public service board decide the case for realizing. [applause]

>> communications and energy, factor into nearly every major decision and employer makes. and the postrecession economy, the two will be linked and for vermont to complete locally we must have the best of both working seamlessly together. whether its information technology, manufacturing, farming, education or health care, a strong indications and energy infrastructure is critical to the vermont economy. fortunately we start this new decade from a solid foundation built through years of hard work, planning and foresight. in 2007 the legislature join me in setting forth a very ambitious goal, universal broadband and wireless in every part of the state this year. bit east initiative was and remains one of the most forward-looking statewide telecommute haitian plants in the nation. although the recession has done our efforts, we've made tremendous progress. thanks to a head start, vermont

has been well positioned to take advantage of the opportunities provided by the american recovery and reinvestment act, while other states asked for planning funds from onslaught and one major federal grants for telecommunications technology implementation. with nearly $70 million in arra funds, plus an additional $120 million in investment like vermont utilities, we are building a high-capacity, fiber-optic backbone that enables next-generation innovations to take root and grow in our state. part of this backbone is our smart grid. a breakthrough in energy conversation. smart grid will help families save on electric bills by knowing the best time when to use appliances. businesses will cut cost by choosing to operate equipment when it is least expensive. and vermonters will be prepared to take offense at new technologies such as electric cars to cut emissions and clean our air. from this high speed backbone we are working with telecommute haitian providers to build out

our minimal mile connection points into schools and libraries across the state. the final stop of the mont high speed network is in every home and workplace. this is what it gets compensated for a state that is comprised of steve rugged hills and winding dirt roads. there some places you can't get to from here. and frankel, i don't want to change that. but for families and businesses that want to get connected, and are still not sure by high-speed internet, i propose a backroad broadband program to spur local providers to build last connections. for two years, the vermont elocution additions thornwood for the cost of a high speed internet connection into the home or office or the providers of this means a guaranteed return for a limited window and a great incentive to run the final stretch of line to every customer. this is not an ongoing program for either customers or providers. it's a use it or it deal that will speed us toward meeting our e-state goal of universal coverage. for employers and employees

alike, the attraction of the state wide from stem to stern is powerful. businesses of all sizes can be connected at every hour to clients around the world. small footprint firms can be close to our legs without sacrificing sales. telecommuting options multiply for every one. within a state government, the investments of a wired future will be pivotal in our efforts to deliver high quality services more affordably. with each new connection, a network potential grows for applications both public and private, helping vermonters exceed from the office to the classroom. the ever-growing burden of property taxes threatens the financial security of vermonters and the potential of our employers. getting a handle on this cause is essential to our economic future. in the last decade, total net education property taxes have nearly doubled. from just over $450 million, the $900 million today.

and that 900 million accounts for only two thirds of what vermonters actually pay to support education. almost half of the taxes, a third of sales taxes, and a third of the purchase and use tax go to pay the total bill. containing cost is the only way to halt the client of property tax bills and make our state affordable for families and businesses. that's what i continue to fight so hard to put the brakes on spending and to reform our broken funding system. in recent years i called for caps on education spending, but we took only a small step in containing costs with a two vote approach. last year i redid my call to cap school spending, as part of another push for comprehensive reform. well, another year has passed. ideas have been offered. groups have met. studies have studies have been studied again, but little has been done. despite the recession and near zero inflation, school budgets are still projected to rise by 2% next year. property taxes are slated to increase by $59 billion.

and for the first time since the adequate, the statewide property tax rate will increase by $0.02 to cover every increasing costs with an additional 20-cent jump over the falling two years. pushing residential rates 26% higher than today. these facts paint a disturbing picture of the future, burdened by increasing property taxes suppressing job creation and homeownership. meaningful reform must address each of the three core drivers that bush property taxes higher year after year. foremost, we need to cut costs and bring spending in line with reasonable standards that we must modernize our antiquated education bureaucracy, and we must be prepared to disentangle the twisted funding system born with acta 60. we can and must change reform and improve education funding and indeed, education and vermont. [applause]

>> since 1997, school staffing levels have increased by 23%. while a student population has decreased by 11.5%. the number of teachers aid has gone up 43%. the number of supports that has gone up 48%. for every four or fewer students, a new teacher, teacher's aide or staff person was hired. there are 11 students for every teacher. the lowest ratio in the country. and a staggering five students for every adult in our schools. with personnel costs accounting for 80 percent of total school spending, it's no wonder that our k-12 system is among the most expensive in the nation at $14000 per student per year. and most organizations, if your customer base is shrinking, you make adjustments to stay within budget. and at a minimum, you stop hiring.

although some will be quick to school but that education is not a business, neither is medicate or public safety or environmental conservation. but in each of these areas, if we ignore the basics of prudent financial management, we imperiled the services we provide. until labor costs in our schools are brought under control, taxpayers can expect our bills to grow every year in the owners of the property tax will continue to threaten a healthy economy. i appreciate the difficulty of producing personnel costs. over the cost to use, the state has taken necessary, sometimes painful steps, to find labor savings through vacancies, retirement, and when all else fails, layoffs. i'm grateful that state employees who last week ratified by a wide margin the new contract that is in the public interest. [applause]

>> 3% wage reduction frozen for two years is a meaningful and important contribution to the greater challenges that face are more. to date we have not seen similar agreements between teachers and school boards. in fact, teacher salaries have continued to rise during this recession. if teachers contract me or does the recent state employee contract, there would be no need to raise property taxes in 2011. current staffing and compensation levels cannot be maintained as the student count continues to decline. if we simply move from our current 11 to one student-teacher ratio to 13 to one, we would still have one of the lowest ratios in the country while saving as much as $100 million. if we want to make education cost sustainable, we must return balance to our classrooms. i propose that over four years, we bring our statewide student-teacher ratio to affordable levels. by leveraging the retirement bubble among teachers, we would be able to achieve significant savings through attrition alone.

without any disruption in the classroom. this is not an army retirement incentive, but a mechanism to fill on the one vacancy for every two retirements. based on our experience at state government, this approach is sensible, achievable, and much preferable to the alternative. to further rein in the massive growth in labor cost, i propose requiring that new teachers contracts establish a minimum 20% share for health insurance costs. state employees and many others in both the private and public sectors have accepted a 20% share as the standard contribution. our school governance structures are a vestige of the 19th century. like our unsustainable personnel costs, must be reformed. we have 297 school districts. one for every 312 students. 63 different supervisory bodies, and the state board of education. that's a total of 354 different education governing bodies for a state with only 251 towns.

we spend by some estimates nearly triple the national average for school administration. there is no doubt that we have room to make our system of education more efficient and more affordable. a recently issued report from the transportation policy commission outlined changes aimed at improving student outcomes. one recommendation, consolidating into as few as 12 education districts, highlights that a 21st century government systems and, a modern system opens the schoolhouse doors and allow students to explore new learning opportunities and different settings and with the latest technologies. reform of the outdated school governance bureaucracy is long overdue. the plan put forth by legislators and my administration two days ago calls for a 5% reduction in government spending of the next fiscal year, and an additional 10% reduction in 2012. streamlining services, centralizing back-office functions, and consolidating districts will be necessary to meet the challenge.

restraining government spending will allow us to make investments in reforms. classroom technology and most important, and our students. at the root of our education funding challenge, is a system that is substantially eroding local control. each year the connection between your school budget vote and your property tax bill becomes more and more distant. expanded subsidies mask the true costs to the budget you approve is not the budget you are billed for. and even as tax rates decrease, property tax bills increase. this is the upside down world, spawned from act 60. when there is confusion for there is no control. if we're not certain about reforming this system, your town vote will become an empty action and local control will be dead. we cannot allow this to happen. at 13 years old, i education funding regime has grown into an unmanageable maze of exemptions,

deductions, rebates, rebates, cautious and hidden funding short sources. overlapping rings of complexity keep all but a few experts from understanding its many moving pieces. this is a good tax policy. it's not good government. if you ask most vermonters, it's not good for much of anything. it's time to pull back the curtains and let the sunshine on how education is funded. transparency, who is paying, what are we paying for, what are the results? there's been a missing element of education, financing, that is the passage of act 60. something most were mantras may be surprised to learn its taxpayers are funding 1000 students who don't exist. the so-called phantom students are a creation of our system. when a score report it to per-pupil count every year, that number can only decrease by 3.5 percent from the previous year, regardless of how steep the actual decline. for schools shrinking year after year, this policy compounds the distance between reality and what vermonters pay for.

i propose increasing the cap to 10% this year, and gradually phasing it out over three years. when i first went to town me, each voter knew a vote for increased spending was able to increase his or her property tax. vermonters were generous, but careful. as education funding evolves, some programs like income sensitivity were created. this was a necessary safety valve to ensure that low-income people were not forced from their homes by high property taxes. overtime and over my objections, this program was expanded and more and more people with higher and higher incomes. what started as a systems to the less fortunate has grown into an entitlement for over two thirds of taxpayers, some with incomes as high as $110,000. from a school budgeting perspective, income sensitivity subsidies distort decision-making by forcing the majority of voters on the real cause of education. next year 70 percent of

vermonters will be shielded from the full brunt of education spending decisions. when an increasing number of voters are exempted from paying the full share, higher school budgets become easier to pass. the natural check and balance of the old tom meeting is gone. while that might seem like good politics to some, it's terrible policy. each expansion of the subsidy pushes increase costs to a shrinking number of residents and businesses and further in those local control. it since spending and property tax bills ever higher making our economy less competitive. the push for greater expansions is also lead to extreme inequities in the system. there are over 6000 vermonters receiving a property tax subsidy who own homes valued at $100,000 or more. of those, there are 136 people who live in $1 million homes being subsidized. in the education fund income sensitivity payments are a growing dark cloud blocking out

more important priorities. this program is expected to grow by $26 million next year, a jump of 18% that it will be able at 11 percent of the entire education fund, bigger than the special technical and adult education programs combined. if left unchanged by toys go, the program will cost $183 million, 54% more than just four years earlier. as the cost of income sensitivity grows it leaves less money for important education priorities. the choice between directing education resources to our children and growing the subsidy is an easy one. by making progressive eligibility adjustments and curbing payments on homesteads valued at greater than $400,000, we can put the program on a sustainable course, preserving it for those who need it the most. [applause]

>> i recognize that changes to the income sensitivity program will impact some taxpayers, but bringing common sense to the subsidy is an essential step to reducing the overall cost of education and providing real property tax relief for all in the years to come. in fact, if income sensitivity payments were not increase this year, there would be no increase in the residential property tax rate. our goal must be to reduce the need for extensions over time with responsible school spending decisions and a robust tax base that allows for slower rates. my proposals for education reform go to the heart of runaway spending. and taken together, stop the projected 2-cent increase, plus drop the rates by another penny. compared against a system left unreformed, my proposal will result in a $33 million in lower property taxes, a welcome break for taxpayers. [applause] >> as we work to reform

education financing and bring balance back to our system, we can't lose sight of our underlying purpose, to provide high quality learning opportunities at a cost that doesn't strain our economy. forcing our children to leave in search of jobs, take our education investment with them. throughout vermont, efforts are underway to help students to learn and giveaways at different times. we must always be on the look out for new ways to insure our system of education and serving the needs of today's students. currently, vermont schools are prohibited by law from accessing out of state distance learning programs. this is a barrier to a student who, for example, is interested in learning chinese what a request to a graduation. the school sought to provide a new chinese program for the student or even a group of students, it would have to hire a new teacher with the expertise, a costly step. allowed students to access a proved distance learning programs from around the country is a simple, affordable change we can make to improve quality

and increase opportunities. and as a change that come them as our efforts to wire schools and apply new technologies to the classroom. no longer can we settle for the old paradigm that says, the only way to improve education is to spend money, to hire a teacher for a classroom. instead, new thinking, creative ideas and enables towards change that excites, empowers and approves the education of our kids must guide us in constantly reforming education in vermont. in all our efforts, vermonters will judge us on the sum of our work, not the parts. they will judges on our ability to get our economy moving again and on our ability to work together and craft a sustainable budget. if ever there were a time in our state's history for public servants to join together, and dedicate ourselves completely to the economic strength and individual prosperity of our people, that time is now. as a young man 37 years ago, i

took my seat in this assembly for the first time. i listened as governor davis bid farewell to the office that i am now so honored to hold. that morning the departing governor spoke of the foundation rooted in fiscal responsibility, efficient government and environmental protection. but that foundation was not an end in itself. rather, it served to help vermonters faced a fundamental question he posed. how shall we preserve the vermont way of life? like all under this golden dome, i've shared in the joys, sorrows, a competent and disappointments of daily life, here and across our state. i've been a firsthand witness to and participate in that vermont way of life. i've seen it in a neighbor helping stack wood or pull a car from a deep root in mud season that i've heard in town meeting debate and deployment speeches. i felt it on the coldest winter night and on a windy autumn day. i've known it in the service of a firefighter, a church deacon,

with the anonymous volunteer just doing her part to better the community with no expectation of thanks. a vermont way of life is something not easily defined. it's rooted in a common decency and nad term of hope for better future. it's a shared love of his land and respect for one another. and i can attest it is something worth preserving, something worth defending, something worth fighting for. as we embark on the road ahead, let us all take strength and comfort for the knowledge that others who have come before have succeeded in keeping for this generation promise of vermont. but let us be hobbled in the understanding that it is our duty to keep that promise for those who have follow. may god bless each and everyone of you and the great state of vermont. thank you all very much. [applause]

[applause] >> washington governor chris gregoire started her second term last year, and in her state of the state address this year, spoke about the state's finances. and education. this is about 40 minutes. >> thank you very much. thank you all very much. thank you. [applause] >> thank you all very much. thank you. thank you all very much. thank you, brian, for your prayer, your words are

appreciated and so too is your leadership. thank you very, very much. and a big thank you to actually, to marlin and mercy for the wonderful performance of the national anthem. i first heard these three young women a few weeks ago, in graduation ceremonies for washington youth academy. and i knew that their voices and their spirit needed to be here today. mr. president, mr. speaker, madam chief justice, distinguished justices of the court, honored officials, members of the washington state legislature, former governors, tribal leaders, local government officials, law enforcement officers, members of the counselor association of washington, my fellow citizens, gives me a great deal of pleasure to introduce my husband and my best friend, mike, rcn has become known, first mike. mike continues his work --

[applause] >> mike continues his work in our schools, teaching kids to love reading as much as he does. and on a lot of mornings, he leaves the house with one thought in mind. what will he do to assist his fellow veterans and any number of ways from helping when they return home from war, to finding a job. so thank you, mike, for all you do for the people of the state of washington. [applause] >> and mike and i are blessed to have two wonderful daughters and a great son-in-law. courtney and scott couldn't join us today, but i'm pleased to have michelle here with me. now michelle is about to decide if she's going to get a law degree. which makes my husband, mike, just a little bit nervous. along with courtney and scott, that would make for lawyers at

the dinner table, and then there would be mike. [laughter] >> so mike, we want to promise you here and now, that we won't make you file a motion when you want us to pass the salt and pepper. [laughter] >> this afternoon, i welcome the 61st washington legislature back to olympia. i very much appreciate the simple fact that 147 men and women are willing to interrupt their lives to spend their days and often their nights, struggling with how best to serve the people who sent you here. it is not easy, but it is important. it's an understatement to say this year will be incredibly challenging. it will test us, and the values we hold like no other year, but this year will also be long remembered. we've been called to steer our state to one of the most difficult chapters in its history. and tragically, washington has

lost 21 of our heroes to terrible violence at home and abroad. in 2009, we witnessed unspeakable tragedy. seven of our law enforcement officers were killed in the line of duty, from lewis county and pierce county, seattle and lakewood. and overseas, 13 of our military service members from washington were killed in iraq and afghanistan. and just last week, a grant county deputy died on patrol when his car rolled over. it is often said that law enforcement officers and servicemen and women make the ultimate sacrifice to support us and our nation. sadly, in this past year, the real human tragedy behind these words was driven home to us with numbing regularity. they are sons and daughters. they are brothers and sisters. husbands and wives. moms and dads.

colleagues and friends. and while they are lost to us forever, they will never be forgotten. these are my heroes. they gave their lives to protect us, and they come no better than that. and let us always remember the families who are left behind, and their sacrifices. they, too, are my heroes. and my heart still breaks for them. we have a list of these law enforcement officers and servicemen and women. please join me for a moment of silence for them and their families. . .

these people are good people, people who have always worked and now for the first time are filing for unemployment. parents who have sacrificed to make their lives for their kids are now struggling just to put food on the table. people who believe in the american dream of homeownership and now feel the fear of foreclosure. people who are used to getting a helping hand to others and are now forced to help themselves. people like i know at the food bank where i was handing out food. he looked me in the eye and said, i've been coming here for years, but until today i was

always on your side of the table. i never thought i'd be in the receiving line. sadly he is not alone. in 2009 about 475,000 people in our state sign-up for unemployment benefits. these aren't regulars. most are first-time recipients. the loss of job start creating a ripple effect towards agencies and our economy. today, one in 13 of our people received basic food assistance. in more than 40% of them are children. fall of 2009, more than 26,000 homeowners watched their dream of homeownership fade as they experienced the heartbreaking process of foreclosure. more than 86,000 people on the basic health plan are remaining just one serious away from financial ruin.

to all the southern families, we have a duty to session to rebuild the economic future of washington. for all of us who are called to public service, i would suggest that now is the time for leadership. it's the most important time for us to serve. for as difficult and as challenging as the decisions of life ahead of us will be, now is the time to be decisive and now is the time for compassion. [applause] it's a time to make a real difference for people. it's the time to truly shape the future of our state. in the best of times, people forget legislative session. in the worst of times, history shows decisiveness is what is remembered. we must have the courage to make hard choices and to decide for

tomorrow and making decisions for today. there is no question the challenges facing washington families are great. i also know the resiliency, the creativity and the worth ethic of the people of washington. we won't get through this historic recession. and i know as sure as i know my beloved state that washingtonians are moving forward to a better and a brighter future. [applause] i know washingtonians don't expect us to solve their problems. i've said it before and i'll say it again. the best solutions to our problems come from within, within our families, within our communities, our service organization and our faith-based communities. so how do we help build a bright economic future for our state? well, one of the things i love about this job is that i get to

talk to washingtonians across the state. i visit schools and diners, factories and coffee shops. and here ladies and gentlemen is what i hear people say, they tell me they are scared. but they know things will get better. and the new economy doubling its job for the growth industry of tomorrow feels like clean energy, health care, and technology. they definitely do not want business as usual from government. they want real government reform, real innovation, real service improvement and more value for their tax dollars. they expect to have to manage the economic crisis and focus on rebuilding our economic future. they worry about their kids future and they want to prove to pursue their dreams. they want the security of having health care for themselves and their families. and they want to make sure that

they have safe communities for all of us. in short, they want us to make tough choices, both to help those families get back to work today and make decisions that will ensure our competitiveness so they will be able to start and keep working for tomorrow. jobs are the way out of this recession. kopp [applause] some of our actions have been tainted today. affirmed by the voters, produced the largest transportation construction program in history and supports more than 21,000 jobs annual. a creation of the discovery spending 2005 has helped spark our global health initiative and the biotechnology and medical devices industry.

to our benefits, we have embraced a clean energy future. we now have 400 clean tech companies in washington state and we are still growing. these and other actions resulted in forbes magazine, ranking washington higher and higher until we are now the second s. dates in the nation in which to do business. [applause] but we can and we must do more to create jobs. we need to get washington state backed to work. we await to our families to provide them with job opportunities. so why they plan to create as many as 40,000 new jobs this year. now here's how we make it happen. washington has always been a state that attracts capital,

both financial and intellectual. we need to keep that tradition going in one way to do that is to stimulate capital investments in biotechnology, software development, health care, clean technology, renewable energy, and other industries that will drive our future. the goal is to attract $2 billion in capital investment to fuel job growth in our state. we all know small businesses are the back one of our economy and their suffering the damage of this recession as much as hireone else. employees, but they need our help. and that's why i'm proposing a new employee tax credit for each small business that hires a new full-time position. [applaus i will direct agencies to enact

a green building program that will retrofit state buildings, so we put able to work immediately, reduce our carbon footprint, and we save $60 million in energy costs. and i will create the clean energy business development program to position washington to be a leader in the clean energy economy and keep us competitive globally with the world moving toward a smart electrical grid, we will actively work to attract those businesses, to invest in and create jobs in the great state of washington. we must make washington a chart to do business, by removing barriers to investors. that's why i will further proposed streamlining and simplifying permitting. [applause] many hard-earned time-limited development permit has sat

unused while developers wait for financing and discredit tight economy. i will direct my agencies to extend those permits for two years so hundreds of millions of dollars worth of projects can break around as soon as possible. our new one's front door program will improve customer service information. i will expand our multi-agency permitting teams to help businesses break through the red tape and to quickly move to job producing construction. job opportunities must exist all across our state. in some areas, the unemployment rate has soared to more than 14%, 14%. i will encourage development in these hard-hit areas i amended the rural county tax credit program so it's easier for employers to qualify and hire more workers. [applause]

washington families and businesses are cutting back. and they're trying to do things smarter and same make do with less. governments must be smarter and more efficient as well. washingtonians are our customers than they want one-stop shopping. they don't want to have to drive across town to government offices. they want computer kiosks that offer more convenient services at less cost. they don't want to wonder where their tax dollars go. they want agencies to be accountable and to show value given for every dollar received. i had a guy tell me recently that he was dreading coming into a new driver's license office to renew his license. in a letter came in the mail telling him that he could go online. what could've been a two hour long trip turned into a two-minute exercise. now that's the kind of service government should and can provide to the people of this

state. [applause] we are streamlining state government. my program to build state agencies accountable for providing quality service and value for every tax dollar has been funded for its innovation. but a school of government at harvard and other counsel for state governments. by executive order of the lemonade 73 boards and commissions. by businesses today we are cutting costs, reducing staffing, increasing efficiency by consolidating back-office support services like our motor pool, property management and technology. we are using technology to better serve the public at less cost. the department of licensing in its most recent improvement is closing or modifying 26 officers and deploying service terminals around the state that will make service easier and more accessible to the public and

result in more than $3.5 million in savings every biennium. since we met a year ago, three scientists from different agencies can no longer be found standing in the same river doing research. now state agencies can rely on one scientist to gather the data and show the results. these and other steps have resulted in the? center weighted washington date as one of the top nation. [applause] but we must do better. i like government reform this year. it time for us to peel away the outdated and costly layers of governments that were once needed but no longer do. so this session i'm asking you

to approve legislation that would eliminate 78 more boards and commissions. but don't stop there. i'm proposing mergers for realignment that would reduce or eliminate one third of the 64 small state agencies. now is the time to create a lean and effective government. today we have three growth management hearings board and five environmental appeals board. each doing business its own way. let's reduce to one growth management hearings board and to environmental sheering board, with just one appeal timeline instead of procedures for environmental and land-use appeals. now is the time for us to be more practical in the way in which we do business. over the years the department of commerce has become a hodgepodge of programs. this session i'm asking you to move 25 programs out of the department of commerce so we can focus on it vertical core mission and the programs can be

better aligned to meet the needs of their customers. now is the time to have the courage to close institutions that may be an important fixture in the community but are no longer did, whose services are no longer needed or can more effectively be provided elsewhere. so i am asking you to close all for part of ten state institutions. first i propose to close or partially close five correctional facilities. by more efficiently using the beds we have, we can save $65 million over four years and not release a single offender prior to his or her earned release date. further, i'm requesting that we close to a bar residential centers and provide the residence with better care in our community.

1970's with 68 institutions serving 4000 people. today with only one less we serve 900. and finally, i'm asking you to reduce the size of three juvenile in editions. the last in the state closed an institution was in the 1970's. now is the time, this session, for us to demonstrate as difficult as it is that washington state governments makes good business decisions, not political ones. the road to recovery and a bright economic future also start with us effectively managing our budget prices. we already have good management tools in place. our creation of the rainy day fund work exactly as it will be tentative and helped prepare us for this current dreadfully rainy day. that step and others have helped improve our bond rating and as a result we are getting the best bond rates within 30 years.

and that translates into us being able to get more projects and more jobs for the people of the state of washington. we have more work to do and this session will test our mettle. the state this biennium has a budget shortfall of $12 billion a 30 billion-dollar budget. in december, i presented a balanced state budgets as required by state law. it is said that budgets are state policy, but they are much more than that. the budget reflects who we are as a state and the values that we hold. the december budget was balanced, but it would force a two abandoned the values that defined the state and those are fairness and compassion. it would be unjust, unwise, and unfair for us to abandon our friends and neighbors when they

need to the most. [applause] the balanced budget eliminates hospice care, which allows more than 2500 dying patients to remain in their home. for 50,000 risk moms, that's not compassionate. these are our families, our friends and our neighbors we must not deny our most vulnerable citizens the dignity ur living out their final days newborn a healthy start in life. [applause] the balanced budget takes away health care for 70,000 individuals and 16,000 children

here it that's not fair. we must not deny health care to these families and kids who will then pass the cost on to the insurers of balanced budget eliminates early learning for 1500 kids and would eliminate state funds for all-day kindergarten. that's not wise. education is the single best investment for our future and the key to success for our children. [applause] the balanced budget closes the door to college on 12,300 low-income students. that's neither just nor smart. a child born into poverty must not he told college is out of reach. let me tell you a story about a young woman named jamal brown.

janel grew up in poverty and is a survivor of domestic violence. she has seen how poverty hurts kids. teen pregnancy, drug addiction, gang killings, joblessness. thanks to a program called healthy promise which provides tuition and fees to low-income students, janel today is a 21-year-old junior at the university of washington in the first person in her family to go to college. janel has arty made lands to go gives back to prepare kids for other backgrounds to college of business. without tuition assistance, janel is emphatic. she never would have gone to college. she hasn't left the inner city behind. she regularly returns to the community in the community in talks to kids. she says that kids need to see someone they can relate to like her so they know it's possible to break through tough

circumstances. and janel tells the kids this, if they do their part somebody will meet them halfway. ladies and gentlemen, we need to be that somebody who m them halfway to be there for them. [applause] i think janel is with us today. are you there, janel? [applause] and speaking of being there for those who need it, those three young women who sang for us earlier are due to our investment in washington academy. the academy is proving that second chances work and it's

turning around the lives of at-risk kids who have nowhere else to turn. [applause] there is no question we need to make dramatic heads to the state budget. i've identified about $1.7 billion in real cuts. but cuts at that level will end up costing us far more than we save. as we learn my people from janel, investing in human potential today will produce a brighter future for washington tomorrow. we can make cuts that will ride off a generation of kids, produce rising crime rates, increase public assistance cost and leave us with a legacy of squandered human potential. or we can invest in tuition aid today on producing new crop of first family college grads.

[applause] we can make the cuts and wait for higher dropout rate and all the story and social costs follow, or we can invest today in early learning which is a proven tool for increasing the success of our kids and they need us. [applause] we can cut costs and transfer higher medical costs were doctors, hospitals and insurance families or we can invest in health health care today and help contain costs and prevent our families from facing financial ruin. later today i will present a budget i can support. accounts on new revenue about $750 million in cuts of almost $1 billion. the revenue will come from new

federal dollars on a new taxes or both. like you, i don't want taxes to harm the economic recovery of our families or our businesses. but they also cannot abandon my values. i cannot eliminate the safety net for our most needy and cannot cripple our economic future. let me be clear. we cannot just cut or just tax our way out of this immediate budget shortfall. we must have a responsible balanced approach of painful cuts and new revenue. it's clear our recovery will not be complete by the end of this biennium. our 2011, 13 budgets of looming concern to all of us. so let's get to work, let's do what's right for washington state. [applause]

as we all know, building a bright economic future also starts with her guiding our children a first-class education. we've made progress in the recent years. our historic efforts to improve early learning are guaranteeing more kids success in school. our k-12 student test scores continue ranked high nationally. our innovative schools in cities around the states have been highly successful in raising math and science skills. our community and technical colleges are rated one of the best in the nation. in classrooms, our hard-working committed teachers are focused on improving teacher and student performance. in 2009, almost 1250 of our teachers received the prestigious national board certification and we ranked fifth in the board certified educators.

in part because of the investments that we have put in place. [applause] so we are making progress. but we can, we must do more. we must preserve and enhance the early learning initiative we started four years ago when we created the department of early learning. despite our tough times, now is the time to build the economic future for our children and our state. so i ask you to adopt legislation, creating all start from a voluntary washington preschool program to provide early learning opportunities to all three and four -year-olds in our state. [applause] to ensure a good start for all her children, i ask you to

continue our implication of all-day kindergarten for all of our children and to assure that all of our children get the education they deserve, wherever they live in our state, i'm asking you to lift the levy lid and fund levy equalization. hot [applause] haile affect his teachers in the classroom and principals who are leaders are the key to student success. i urge you this session to approve an overhaul of the way we evaluate teachers. the new evaluation system, must focus on what really counts. quality education, student achievement and growth. for the first time, i will ask you to provide assistance to evaluate the performance of principles based on student achievement as well. if we have schools, where dropout rates are high, student

performance and achievement is low and were no progress is being made, we need to be able to step in and turn that school around for our children and their parents. [applause] our higher education system is a major economic engine for our recovery. we need to keep the doors to higher education open to students of all income level by restoring funding for our states made program. we over to all of those like janel who couldn't attend college without our help. i'm asking you to provide funding to our community and technical colleges to retrain 2500 of our workers for the jobs of tomorrow. and i am requesting you provide our four year institutions with competitive tuition flexibility so that we can continue to be ranked among the best in the

nation in producing the most innovative workers and employers. as our nation prepares to adopt historic health care reform, let's ready ourselves to implement it the washington way. our delegation is working hard to achieve fundamental fairness for our state children health care, reimbursement for doctors and hospitals inducing the basic health plan as a model for the rest of the country. we can show the rest of this nation have to provide higher quality, lower cost health care to thousands of more washingtonians. let's get to work. hot [applause] finally, rebuilding our future means that we need to make sure that our families are safe. we have been making progress. our communities are safer today

because we give members of law-enforcement communities that help they ask for and dealing with sex offenders. they have done a natural job. last year more than 28,000 adverse verification visits were made, resulting in 800 arrest for failure to register in 1700 arrest on other warrants. our highways are safer. since 2002, the number of highway deaths start from 659 to 481. last year mothers against drunk driving select date our washington state patrol as the outstanding law-enforcement agency in the nation for its dui enforcement. congratulations, chief. [applause]

but we must do a better job at protecting our law-enforcement members and our families. this session we need to strengthen our mental health laws to prevent the release of violent offenders to our streets. our families are safe when a murder where is released from a mental health hospital after just two years of treatment. when a man convict did of a brutal murder of an elderly woman disappears on a field trip to a county fair or when a violent criminal history isn't considered when decisions are made to involuntarily commit individuals. the rights of dangerous mentally ill offenders cannot trump the safety of our families. it's time for us to ensure both. [applause]

so i will send you a package to hold offenders accountable, to increase the sentencing tool for prosecutors and give more weight to mental health and criminal histories when making commitment decisions. recently, we have all been shocked by the tragic loss of our law-enforcement officers. leaders of our criminal justice community have come together. with them i propose improvements to communications to rout the justice system. how bail is administered in our state and how the interstate compact system can better provide public safety to washingtonians. we must ensure that the legacy of these fallen heroes survive by giving their families the support they deserve. surviving spouses must be entitled to retirement benefits regardless of the fallen officers length of service.

and for the children, it is our duty to make available to them a college education. these proposals have been carefully crafted with the help and expertise of law-enforcement communities. they are measured, they are thoughtful and they ensure that some tragedies we learn we take action and we do the right name. so let us get to work for tho tr families and for our entire law enforcement community. thank you. [applause] somebody once asked dad marked or luther king junior when he thought the best time was to take action. dr. king had an answer.

the time is always right to do the right name. to each of you sitting here in front of me this day, i ask you, let us work together to do what is right for our people, all of our people, we are all good people. we all have values. our work is complicated and sometimes values collide. what we do about that is called governing. so let's leave the partisan politics to election. washingtonians hate how divided things have become. they just want us to solve the problems. [applause] so i'll tell you right now. if you have better ideas on how to create jobs, reform

government, balance our budget, improve our schools, provide quality affordable health care or insured public safety, i am ready, i am willing to listen to every idea. these are serious days ahead. too many families today are getting layoff notices, watching unpaid bills pile up at home, losing health care for their families, telling their kids they can't attend college, standing in line at a food tank or dipping into a dwindling savings account just to get by. let's not waste their time. let's not waste this crisis. our time is here to encourage them to keep the faith in the great promise that the state has to offer. our time to help provide them with a great economic future is not going to be easy. the decisions that we have to make will not always be popular, but we have a duty to our

families and businesses to help build a bright future for washington. at the time is now. it is our time. let's provide the decisive, compassionate leadership our people want and deserve. i bless all of you and god bless the great did of washington. [cheers and applause] [cheers and applause] [applause]

>> virginia's new republican governor is facing a projected $4 billion state budget shortfall over the next two years. bob mcdonnell was sworn in over the weekend and tonight gives his first state of the commonwealth address. live coverage begins at 7:00 eastern on c-span. tonight on "the communicators," communications workers of america president larry cohen talks about the perspectives and expandin broadband in the u.s. "the communicators," tonight at 7:00 eastern here on c-span 2.

and now international monetary fund managing your domini about the economy. is it introduced by distress ambassador this hour 25 minutes event. >> it's a pleasure and honor to be with you today and a distinct pleasure because when i compare it to previous meetings, i see

very vividly to life liberty and retaliation which is now going on in this chamber. first of all, thank you to the chamber for a mitigation. thank you for the world the fact. let me first commit to you the ambassador will not be with you today. you know it is because he had to be in new york for the funeral so he believed that you could understand and excuse him. he was a very dedicated friend of ours and he has worked in areas dispositions of french-american of the union of french chamber of commerce and industry world. and so he put here to be in new york. but one year ago about almost one year ago, some of you may recall, he was introducing to celebrate the river elevation of

this chapter of the french-american commerce. and as the underlined, we are happy to see that we were much more numerous in terms of number. you were about 150 when you are only forwarder. and the quality is organized a presence here is the best symbol of the success of your efforts. so congratulations to all of you. it is practically striking in the difference here word we have this piece is that as they were constrained activities like the one of the french and this chapter in washington. so the more difficult events -- maybe i would give just a few of our chapter of french-american of commerce like all european and global partner's can't

expand from troubled economic times in the beginning and 2008. the other end of 2008 lately after here. growth domestic product rose 2.3% during the middle of 2008 in the middle of 2009 and as many of the countries we had last year are worse economic governments and the middle of the 90's. over the year 2009, the unemployment rate climbed to 9.5%, very close to the one here. this level was the highest level since 2005. however, many have pointed out that responsive french authorities to assist have significantly belloc waited the insistence of economic. we have our stimulus package and france has been out of recession since october 2009.

the plan announced by french president mr. francois rivasseau which is 30 been spent as a limited research in 2009 and had to withstand household consumption. thanks to the timely measures for increasing most small-business and low-income households and automated industry also france managed to limit the effects of a downturn agreement which has been much worse. and while some of our big neighbors experience between 2008 in the middle of 2009, for example they will be contracting by 512 and german gdp contracting by 4.8. france gdp relates to now a bit better with a 2.8. and respect therefor 2010 is a bit better than 2009 because it

issued to continue on its path to recovery or unemployment is not to decrease before the end of the year. the french government does he know was expecting the very modest gdp growth of 2010 for less than 1% and we have been happy to be able to have 1.5%. but all of that will be much more wisely commented by your guess at today. so let's turn myself to mr. dominique strauss-kahn. welcome them warmly. it's a great honor for all of us. mr. strauss-kahn is a well respected director of monetary fund. mr. strauss-kahn -- it's impossible to summarize it in a few words. but the economic professors at harris university and he is

understanding certainly a message in his current position. very soon he is starting a very political carrier like to do the french national assembly for the first time since 1986 era a very young at that time and was something between 2001 and 2007. mr. strauss-kahn also has strategic additions here cuba's foreign trade for 91 to 93 then becoming the industry between 1979 and. he directly contributed the very bottom drawer. and between the different political assignments, mr. strauss-kahn also grew to be a very talented business practitioner. i will also mentioned is very rich national character as you

know mr. strauss-kahn became the 10th director on november november 12,007 with immediate economic increases for the global finance or revelation arriving. and over the past year, he not only restored financial but also to improve tremendously. and to finish on a more personal note i was lucky enough to be weighing strauss-kahn came to introduce himself to american authorities and i was happy enough to go with him at the white house. then he met with a very high responsible of the white house to make his decision about supporting them or not. the decision was at the end they continued and the white house service was quite surprised to see that mr. strauss-kahn have a much more better performing blackberry then himself.

i am pretty sure that you are the guy we need. so let me introduce now mr. strauss-kahn. [applause] >> well, ladies and gentlemen i'm very happy to be with you because it's lunch time and i'll try to begin by thanking the french-american chamber of commerce for inviting me as well as all of the council. and i'm very grateful for the kind introduction he made, especially the last point which i have myself. i'm going to use it again now. i'm going to talk a little bit about the economic outlook, the challenges facing policymakers and also if you are maybe on

what kind of a post crisis period has remained. we're starting a new year. at the same time we're starting a new decade. and one which holds out the promise of creating a more successful global economic system. and that's why i see 2010 as a year of transformation. on the global economy it's the first year of the post crisis period and policymakers are shifting away from the emergency of crisis resolution, turning to challenges of proscriptive global economy. or this point of view, certainly eight-year transformation. there's also a year of transformation when you look at the global institutions and the framework calvinist framework. they have to go to effect the changing in the global economy

and you accounted them already having been there during the crisis as they need to be in hand. i'm thinking about the g20, for instance. i'm going to say a few words about that later. the main idea being that the way we avoid a catastrophe during this crisis was through much better international corporation that we ever had in the past. so, are we able to see this consensus lasting or is it going to vanish with the crisis served by real question? i would say it is undecided yet. and of course, i will say a few words about the just transformation of the diagnostic serb which has to adapt to serve better the needs of its members. so let's start with the economic outlook.

as always, some good news and some bad news. the good news are that the outlook for growth has continued to improve and the recovery can sooner and stronger than it was anticipated. interesting thing is that all the countries were in the crisis almost at the same time. in the u.s. but very rapidly most major economies and emerging countries were in the same situation. it's not the same thing for the recovery. and the recovery comes with different speeds. obviously, in the advanced economy, the recovery is somewhat sluggish and consumption being depressed by unemployment on one hand, by household silence on the other

hand. in the investment itself is in many countries not so strong because of excess capacity. so in most economies including the u.s., between the union, japan, most of the economy's recovery as they are. it would be unfair not to say that. that sluggish. and to say just a word about france while workshare, the invitation after french-american chamber of commerce. as you just said, the growth came for us in the second quarter of 2009, mainly to the measures which have then demented by the government, the stimulus factors on one hand and the sub sectors support on the other hand. they paid obviously a very important road, but keyer to recovery would be significant but rather slow. we expect something between one

and 2% of growth for next year. and it's much better than 2009. obviously, it's not enough. emerging markets economy are a different situation. emerging markets economy rebound is much lower, specially in asia. everybody knows mainly due to the resilience of the domestic demand. so that's the good news. in one word, better, better bet is fragile and that's the second point. that's the part of the values. because even if we have this recovery sooner and stronger than it, obviously the recovery is fragile, especially in an advanced economy. and the reason is exactly the reason i just mentioned. and most advanced economy, the rebound alive on public support

and private demand is still very weak. so until private demand will be strong enough to produce a stable growth, we cannot say that we are out of the woods. and when you look at the employment figures, for instance, if you're in the u.s., they reached past what we call something like 10% and may rise further in the coming months. and of course, we all have to keep in mind that the unemployment rate is huge and not only a question of economic goblins. it is already and will even more become a social problem with a lot of countries and household and pressure on the safety net system existing in the different countries. when you look at developing economies, they are in some

respect innocent adams of the crisis, but they have been hit hard and have been hit later because their connection was global financial systems were not so wrong so they have been hit by the downturn in growth and have been hit by the slowdown in remittances, all these kind of things. so it takes a couple of months. and then they have been hard hit. and the consequence will be obviously increased poverty of france from the world bank, just released some figures showing that 90 million, 90 million extra people will fall into poverty come extreme poverty, less than $1.25 a day before 2010 as the direct result of the crisis. so, while the outlook is improving, i will just say we're not out of the woods yet. so in this case, let me come to

my second point here is what we should be, will be candy, what we have to be the major policy priorities for 2010. i see three of them. first, security, the economic recovery of course. second, backing unemployment and go ahead with the financial sector reform. first point, securing the recovery. the question everybody's talking about, at economic congress to end social dinners is an attempt to exit. we put in place together a huge stimulus that was unprecedented effort to try to support them. now that it is back, should we exit rex that is a tricky issue. the question has the choice between too soon and too late is a very low probability to be exactly the right time. so should you choose a strategy

without the risk of exerting too late or prepare a strategy where you have an exist of exiting too soon. and from this point of view, what i want to underlie is that in our view it's totally acting a trickle. of course, if it's too late for the different program that you have mentioned it has a cost. and especially everybody understands the cost of public debt because most of the programs are financed. so it has a huge cost and you shouldn't make too many mistakes in existing too late. on the other hand, the very difficult problem of decrease in the public debt will be a problem for most advanced economies for the coming decade. five, six, eight, ten years. so exiting too late by one, two,

three three-month, six-month of course has a cost. when you make a mistake, it has a cost. but the cost is to be compared to the fact that however it will need a long period of time to fix this problem. on the other hand, if you fix it too soon then you're really in trouble. our forecast at imf is not that there may be any kind of double dip as some are expect dean. a double dip meaning that we will recover and then go back in the crisis. it's not our professional but there are some risk. and it will be totally irresponsible to say that it cannot happen. and if it happens, including if it happens because we withdraw the measure to worriedly, then let the say i don't know what we can do.

all the tools we had in the toolkit on the fiscal side have been used in even more some have been just invented during this crisis to tackle the crisis, with some success. we avoided something which could have been a much bigger crisis than the one we have contemplated. remember there is more than one year when november 2008 or so many were scared with good reason that we made. the crisis as a depression. and they were right without it's a possibility. working together, we succeeded in avoiding this time. but if we go back to negative growth on the really i don't know what kind of tool we will be likely to use. so really the risk in my view are from a trickle and we choose a bit too late which i'm not saying has no cost then taking the risk of existing too early. now having sand gnats, what is the condition?

well, what is the index? what do we show for one country and another that it will happen at the same time everywhere. what are the indicators that showed that it is time to exit? and it seems clear that it's linked to the recovery in private demand and we should not fool ourselves looking only as aggregate figures, the really depressing thing is how private demand starts to resume or not. and of course, as a consequence of growth in private demand, they expect that the consequence is on the decline of unemployment. at the same time, another thing which is important to take into account is to know in which respect you really did your homework on the financial stability side. we have, i like to quote this

figure because it seems to me beat as it seems to use surprising we have the imf since the beginning of the institution in 1944, and experience of 122 banking crisis. so some of our small banks in one country. some are rather big, but 122. and all of their objections different contrary, different times, and they are very few countries. and among those very few handful that you see across all the crisis. one is that you never really recover and the cleansing of the balancing of the financial sector has been completed. and they were not example of course of the japanese situation where the japanese government put billions into the economy, trying to recover without any kind of reserve area and ten

years later, they decided finally to clean up the balance sheet and then the recovery takes place. so i make it a bit catchier, but it's very, very important, even if we can handle this problem a different way of the balance sheet of differences to deal with, but it's critical to be sure that at least the largest part, a big part of the problems have been solved. ..

time and the focus has to be put on fiscal. which doesn't mean again that fiscal conservation everywhere has to start today because then we will go back to a new downturn but it least everywhere, the problem is to prepare the consolidation to make it transparent, the markets need to know the government has a plan, that they have the right focus for the coming years so the problem will be addressed, and for instance in many fields like entitlement programs or things like this where you can prepare the effect of which will only come in a couple of years. so, preparer now, but depending

where you exactly are in the cycle, implement now or implement later. in other countries, mostly those where which did not face large bank bailout costs, the problem can be different. they don't have such an important fiscal problem in front of them, and so, tightening can be the first that been several economies already have, are following this route, including australia, china, israel, india, the big economies, small economies. they already started withdrawing monetary support and beginning to narrow the amount of liquidity in which they have put in circulation to faced a crisis. of course all of this need some international cooperation, because everybody understands

that what you are doing in your country will affect another country so if it is really clockwork to try to know the right time to exit then if you don't take it to-- you know-- have no chance of success and of course it is more difficult to have this cooperation now when all they g-20 leaders wehr scared. i remember the meeting in london in april, where you have the 20 or little more than 20 because the gee 20 is always a little fatter than 20, but you had a head of governments around the table and they were so scared that they were likely to do everything in work together. they were the best people in the world. [laughter] when the crisis disappeared, which of course was good news, everybody goes back to its own domestic problems, which is understandable and then, i wouldn't say it has to disappear, hopefully not but it

is not as strong as it was before especially when it passed to let's very long because the time to accept is the one time decisions but something which will last, which will take months, depending on the countries. so, international cooperation is as important as exiting problem and a huge amount to rescue the private sector. it is a bit more difficult to manage it that it was in the case last april or last september. now let's turn to my second point and the challenges in 2010 after securing the economic recovery. the second part has to do with unemployment and the social costs of the crisis. hear the point is well-known. and advanced economies the risk, i say it a bit bluntly, is a

jobless recovery. their risk is a recovery were growth will be back but not jobs. and of course the problem then, as i said before, that only economic problems but in many countries it may become, in the advanced economies even, a social problem and beyond the social problems, a problem with social unrest in be on the democratic problem you may also have some problems which may go to the question of war or peace and we have a lot of examples in the past. where the social and economic instability leads to social instability and social instability to social unrest with a lot of possible consequences, so the question is not only a question of fixing the economy, which of course is the main problem but also to do it in a way that will not put all the burden on one part of the population in the problem of

unemployment is clearly one of the good examples for that, which may create some countries especially the countries where democracy is not as-- which make read a lot of political problems. that is why i use the part of tw as hgned and which is going to be effective in 2010 to try to focus to support employment and reinforce the social safety net. we did that ourselves on a small scale of course in the programs we have in the different countries where we-- and that is probably one of the big differences with the new imf and the old imf, which is that, but only we are trying to put to the countries on the right economic path giving them the right economic fight the-- advises good as we can bet provide

resources to have to do this but at the same time we push the country to put in place for one part of the deficit, which we agreed together to focus for next year. for instance, to take a little part of it to improve the social safety net, to create this kind of safety nets where they don't exist because the most vulnerable are always the ones which have-- are the most hit by this kind of program so for instance from ukraine to pakistan to other countries, there is always something which looks like 0.3, 0.5, 0.6% of gdp which is directly earmarked to be used to have the population and the most vulnerable part of the population to cope with the crisis. now, the third priority is to

keep up the momentum on the financial sector reform. and that is a real concern. what i said before about the difficulty of keeping the consensus in the international cooperation is even stronger, looking at the financial sector reform. al lot has been said during 2008 and 2009 about the need to do something, the lessons of the crisis, although a clear failure and regulation, even more phil year in the supervision of the financial sector. we need something which is stronger in even something smarter. fine. the problem is to design it and to implement it, and that is a long story. the financial stability board does a very good job with a lot of input of the imf.

already some important reforms have been implemented, but there is still a lot to do. in my view to priorities. one has to do with systemic risk, the so-called too big to fail problem and the of the one which is directly in the imf which has to do with the crisis resolution and that is a very difficult problem because you may have the best and some in each countries that don't cooperate and then the question of banks having subsidiaries and other countries and what happens in one country has an effect on another country may be the biggest source of troubles. so, at least on these two questions on these issues in systemic risk, i say we still have a lot to do. the political will is still there, but it takes a long time to do something like that, and what will this political will last long enough?

i don't know. just for you to remember, these so-called basal ii florals took 12 years to be defined and remembered, 12 years, and some, who still have in mind the question of fair accounting and mark-to-market value said it took 30 years to convince everybody to go there so we don't have 30 years. we don't even have 12 years. we have 24 months to be able to set up something which i will say, i won't say totally safe, totally say this not exist but elise sabrin more likely to resist or avoid the kind of problem we just had. of course link to that you have another question which is the question of cost. it is a question of fairness.

we cannot afford a system which privatizes the gains in socializes the loss. everybody agrees with this. fine. how do you you do that? looking forward, how will we be able to address the same kind of problems in another financial crisis that takes place five years from now or ten years from now? nobody can say it is impossible that it won't happen and i am convinced that the most parliaments, the congress here in the united states, the national assembly in france, the u.k. and others, will be very reluctant to say the least to give money again to the financial sector. especially when they see how the financial sector behaves in the aftermath of the crisis. so the real problem is-- icd

no-- in developed countries likely to come back five years from now and say you know, you guys have got to pay again because the financial sector is again nms commisar with we are convinced of this we absolutely need to find a process, first of course to try to decrease the risk of such a crisis but also to create the resolution process, which will be helpful at this time without going back to the traditional way of asking ask for taxpayer money. and that is the question which is at stake when people are talking about the contribution of the financial sector, to be kind of an insurance system, a front that could be useful when do time. again, i think it is a rather good idea and we are working on that, the g-20 has asked the imf to provide a report on this question for april and we will, and it is a very tricky question

you can understand and there are a lot of constituencies that have different opinions and the bankers of course, the banker's opinion is clear. but the other constituencies are very difficult but it is a problem and need to sell. going back to business as usual is absolutely impossible and it will be putting the whole system at risk. i don't know when. maybe into years or in ten years but it will be totally unreasonable to believe that we will never again face the risk of a financial crisis so we absolutely need now to build the-- to address these kinds of problems. so i come now to my last point. i wanted to say a few words on the priorities for the years but for the decade, and that may limit myself to two of them. one has to do with so-called

search for new sources of growth and the second, one point i already said a few words about several times with small remarks which is the international cooperation and collaboration. the problem is well-known. the u.s. household savings rate is increasing, probably as a response to the crisis because people well, don't rely as much as before on credit and they want to save more. if it is a short-term problem or a short-term change in behavior, fine. it has no importance, good. i don't believe so. many economists to believe it is a real change and already have the 6% are so gdp in savings rate which is never happen for

years, maybe decades and people are expecting this may become six, seven, maybe ten. the good news and always in bad news. the good news is is is good for deficit. the household will save, the more it will have to fix the problem of domestic deficit and as a consequence of the current account deficit. that is very good. on the other hand it means less consumption and as everybody knows the u.s. consumer has been the main trigger to growth during the last decade, so if it disappears or if it is weakened who was going to replace the u.s. consumer and the growth? it is not that obvious. everybody turns their eyes to asia and say okay, asian countries will consume more and this will offset the decrease in u.s. it is not that easy.

first it is not obvious that the emerging markets will go that fast and second it is not the same kind of goods and for a lot of reasons you cannot just even on a sheet of paper try to asset won by the other one so easily so the question of new sources of growth is really, really at stake. and that is why the g-20 has set up what they called the framework for strong sustainable and balanced growth, which is a new process were basically the imf is asked to provide analysis, resources, taking other data from countries and putting it together and looking at the consistency between what the chinese want to do in the coming years than the u.s. and european and japan and of course saying that it is consistent and its policy has to be changed to make it consistent because--

some kind of disruption in crisis though trying to deal together with this problem. so we started this process in january with collecting the data from